question archive International capital flows in an open economy have the effect of a
International capital flows in an open economy have the effect of a
Subject:EconomicsPrice:2.87 Bought7
International capital flows in an open economy have the effect of
a. increasing the power of fiscal policy.
b. reducing the power of fiscal policy.
c. reducing the power of fiscal policy in an expansion, and increasing it in a contraction.
d. increasing the power of fiscal policy in an expansion, and reducing it in a contraction.
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Answer
Option- A
Capital flow increases the power of fiscal policy as fiscal policy is concerned with government spendings. Capital inflows result in increased expenditure and make the policy strong.
