What happens when international financial capital is completely free to move in and out of countries in search of investment or speculation opportunities? a. Countries lose autonomy to affect GDP through monetary policy under a free-floating exchange rate policy. b. None of the alternatives is correct. c. Countries lose autonomy to affect GDP through fiscal policy under a fixed exchange rate policy. d.

What happens when international financial capital is completely free to move in and out of countries in search of investment or speculation opportunities? a. Countries lose autonomy to affect GDP through monetary policy under a free-floating exchange rate policy. b. None of the alternatives is correct. c. Countries lose autonomy to affect GDP through fiscal policy under a fixed exchange rate policy. d.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter4: The Aggregate Economy

Section: Chapter Questions

Problem 5E

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Question

What happens when international financial capital is completely free to move in and out of countries in search of investment or speculation opportunities?

Countries lose autonomy to affect GDP through monetary policy under a free-floating exchange rate policy.

None of the alternatives is correct.

Countries lose autonomy to affect GDP through fiscal policy under a fixed exchange rate policy.

Countries lose autonomy to affect GDP through fiscal or monetary policies regardless of the exchange rate policy.

Countries retain autonomy to affect GDP through fiscal or monetary policies regardless of the exchange rate policy.

Definition Definition Policy implemented by the central bank of a country (such as the Federal Reserve in the United States) to achieve certain macroeconomic objectives. Monetary policy is a supply-side macroeconomic policy that supervises the growth rate and money supply in the economy.

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