Question 7 Under a fixed exchange rate regime, the Reserve Bank cannot conduct an expansionary or...

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Question 7 Under a fixed exchange rate regime, the Reserve Bank cannot conduct an expansionary or contractionary monetary policy because 4 pts O changes in the cash rate and other interest rates would affect the relative demand of the Australian dollar, and hence, cause the exchange rates to fluctuate. O changes in the cash rate would not affect other market-interest rates. O the Reserve Bank lacks credibility in its monetary policymaking. the cash rate and the exchange rates are not influenced by market forces under a fixed exchange rate regime. Question 7 Under a fixed exchange rate regime, the Reserve Bank cannot conduct an expansionary or contractionary monetary policy because 4 pts O changes in the cash rate and other interest rates would affect the relative demand of the Australian dollar, and hence, cause the exchange rates to fluctuate. O changes in the cash rate would not affect other market-interest rates. O the Reserve Bank lacks credibility in its monetary policymaking. the cash rate and the exchange rates are not influenced by market forces under a fixed exchange rate regime.

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