An open economy with a fixed exchange rate

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Q1. How do expectations of a near-term policy reversal weaken fiscal policy based on changes in tax rates?

Q2. Why are government imposed "average cost pricing" as well as "nationalization of industries so pricing is at marginal cost" both second best outcomes to the markets of competition? P=MC=min ATC long run equilibrium?

Q2. Assuming velocity were stable, might an open economy with a fixed exchange rate follow a money growth rule successfully if capital moved freely across its borders?

Reference no: EM137575

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