Why is domestic monetary policy ineffective in open economy

Reference no: EM132349136

Question: A) A higher price level will increase the demand for money, but expectations of a rise in the price level will reduce the demand for money." Is this statement true or false according to the monetary approach? Why?

B) Why is domestic monetary policy ineffective in an open economy under a fixed exchange rate regime?

C) A sudden increase in interest rates in the European Union would likely lead to both depreciation of the U.S. dollar and upward pressure on U.S. interest rates." Agree? Disagree? Why?

Reference no: EM132349136

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