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Basic Question 8 of 8
In the Mundell-Fleming model, an expansionary fiscal policy:
B. will give rise to a depreciation of the domestic currency.
C. has an ambiguous impact on exchange rate.
A. will give rise to an appreciation of the domestic currency.
B. will give rise to a depreciation of the domestic currency.
C. has an ambiguous impact on exchange rate.
User Contributed Comments 2
| User | Comment |
|---|---|
| davcer | capital mobility should be known |
| ynaghibi | I think that was the point of the question. If you don't know capital mobility, it will have an ambiguous effect |
I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
explain the potential effects of monetary and fiscal policy on exchange rates;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.