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Basic Question 0 of 11
The combination of the portfolio balance approach and the Mundell-Fleming model predicts that under conditions of high capital mobility, an expansionary fiscal policy will:
B. lead to currency depreciation in the short run, and currency depreciation in the long run.
C. have an ambiguous impact on exchange rates in the short run.
A. lead to currency appreciation in the short run, and currency depreciation in the long run.
B. lead to currency depreciation in the short run, and currency depreciation in the long run.
C. have an ambiguous impact on exchange rates in the short run.
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I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain the potential effects of monetary and fiscal policy on exchange rates;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.