Under a floating exchange rate, contractionary fiscal policies are likely to increase the competitiveness of a country's exports.

Name: Under a floating exchange rate, contractionary fiscal policies are likely to increase the competitiveness of a country's exports.
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Question

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Contractionary fiscal policies can lead to lower domestic interest rates and a depreciation of the currency, making exports cheaper and more competitive internationally.

Under a Floating Exchange Rate, Contractionary Fiscal Policies Are Likely