Fiscal policy is a stronger demand management tool under fixed exchange rates.

Name: Fiscal policy is a stronger demand management tool under fixed exchange rates.
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Question

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Under fixed exchange rates, fiscal policy is more effective because the central bank must intervene in the foreign exchange market to maintain the fixed rate, which often involves adjusting the money supply in a way that reinforces the impact of fiscal policy on aggregate demand.

Fiscal Policy Is a Stronger Demand Management Tool Under Fixed