Question: (T / F) Please state True or false for the following questions and explain your reasons. A transitory fiscal expansion with fixed exchange rates raises

(T / F) Please state True or false for the following questions and explain your reasons.

  1. A transitory fiscal expansion with fixed exchange rates raises the stock of foreign exchange reserves of the central bank. True or false, and why?
  2. Permanent increases in the money supply are more effective in raising the level of income under a flexible exchange rate system than under a fixed exchange rate system. True or false, and why?

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