In an IS-LM model with fixed exchange rates and perfect capital mobility, an increase in government spending will lead to
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2 marks, −0.666666666666667International EconomicsOpen-economy macroeconomicsPolicy under fixed exchange ratesModerateabout 3 min
DSE 2017 Question 50: Open-economy macroeconomics
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Open-economy macroeconomics has come up 55 times in 7 exams since 2006.
What this question tests
This question is on Policy under fixed exchange rates, part of Open-economy macroeconomics in International Economics.
What monetary and fiscal policy can do when the central bank holds the exchange rate.
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