TRUE OF FALSE 1. If, under the fixed exchange rate regime, a country has capital account...

TRUE OF FALSE

1. If, under the fixed exchange rate regime, a country has capital account and reserves account deficits then it must have current account surplus.

2. Ideal exchange rate system involves independent fiscal policy

Solutions

Expert Solution

1) true

2) false

...

Second is false because under ideal exchange rate regime monetary policy should be independent. Under fixed exchange rate it is not independent whereas in flexible exchange rate monetary policy is independent.

Rahul Sunny answered 1 year ago

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