To correct unemployment and a balance of payments deficits with flexible exchange rates and imperfect capital mobility:

Question

Quizplus · Accepted Answer

With flexible exchange rates and imperfect capital mobility, either monetary or fiscal policy can be used to correct unemployment and balance of payments deficits. Monetary policy can influence exchange rates directly, while fiscal policy can affect domestic demand and indirectly influence the balance of payments.

To Correct Unemployment and a Balance of Payments Deficits with Flexible