Expansionary fiscal policy definitely raises the exchange rate.
Answer the following statement true (T) or false (F)
False
Expansionary fiscal policy has an ambiguous effect on the exchange rate, because expansionary fiscal policy raises interest rates, which puts upward pressure on the exchange rate, but it also raises income, which puts downward pressure on the exchange rate. The effect of expansionary fiscal policy is determined by the magnitude of each respective upward and downward pressure.
You might also like to view...
An individual with a Ph.D. in physics who can find employment only in a pizza parlor would be considered: a. discouraged
b. underemployed. c. overemployed. d. voluntarily unemployed. e. long-term unemployed.
To move along a production possibilities curve from one point to another requires additional resources
Indicate whether the statement is true or false