Question: A country with a fixed exchange rate has achieved external balance. Government spending then increases in an effort to reduce unemployment. What is the effect

A country with a fixed has achieved external balance. Government spending then increases in an effort to reduce unemployment. What is the effect of this policy change on the country's official settlements balance? If the central bank uses unsterilized intervention to defend the fixed rate, will intervention tend to reduce the expansionary effect of the fiscal policy?

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