Label the following statements as true, false or uncertain (A). The gold standard was an international monetary system which combined fixed exchange rates with freedom of international capital movements. (B). Under flexible exchange rates, a temporary increase in money supply lowers the domestic interest rate which causes a rise in the exchange rate, leading to an increase in the current account balance. (C) . The Marshall Lerner condition states that a real depreciation will increase the current account balance if the price elasticities of export demand and import demand are very low.
Label the following statements as true, false or uncertain
(A). The gold standard was an international monetary system which combined fixed exchange rates with freedom of international capital movements.
(B). Under flexible exchange rates, a temporary increase in money supply lowers the domestic interest rate which causes a rise in the exchange rate, leading to an increase in the current account balance.
(C) . The Marshall Lerner condition states that a real
(D). Under fixed exchange rates expansionary fiscal policy (e.g. an increase in G) will result in CB purchases of foreign currency-assets and an expansion of the money supply.
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