Country switches from a flexible to a fixed exchange rate

Reference no: EM13694601

Suppose a country switches from a flexible to a fixed exchange rate. Which of the following will occur as a result of this change?

A. Monetary policy will become a more effective tool for changing output.

B. a given change in government spending will now have a greater effect on output

C. Both fiscal and monetary policy will become more effective in changing GDP.

D. a given change in government spending will now have a smaller effect on output

E. Both fiscal and monetary policy will become completely ineffective in changing GDP.

Reference no: EM13694601

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