International capital inflows reduce the power of fiscal policy.

Name: International capital inflows reduce the power of fiscal policy.
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Question

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International capital inflows can lead to an appreciation of the country's currency, which in turn can reduce the competitiveness of its exports and increase the cost of imports. This can lead to a decrease in domestic demand and economic growth, limiting the effectiveness of fiscal policy in stimulating the economy.

International Capital Inflows Reduce the Power of Fiscal Policy