Monetary policy is most effective in influencing aggregate demand
A. under a fixed exchange-rate system without sterilization.
B. when there is low capital mobility.
C. under a freely floating exchange-rate system.
D. under a fixed exchange-rate system with sterilization.
Answer: C
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What will be an ideal response?
When net capital flows are positive
A) net foreign investment is negative. B) capital inflows are greater than capital outflows. C) capital outflows are greater than capital inflows. D) A and B are both correct.
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