It is more certain how expansionary monetary policy will affect the current account than how expansionary fiscal policy will affect it.

Question

Quizplus · Accepted Answer

The effects of expansionary monetary policy on the current account are complex and can vary depending on several factors such as the state of the economy, exchange rates, and the responsiveness of trade flows to changes in relative prices. Similarly, the impact of expansionary fiscal policy on the current account is also uncertain and depends on factors like the marginal propensity to consume imports and the fiscal multiplier. Both policies have uncertain outcomes on the current account due to these complexities.

It Is More Certain How Expansionary Monetary Policy Will Affect