Problem
1. Can you think of reasons why a government might willingly sacrifice some of its ability to use monetary policy so that it can have more stable exchange rates?
2. How does fiscal expansion affect a country's current account under a fixed exchange rate?
3. Explain why temporary and permanent fiscal expansions do not have different effects under fixed exchange rates, as they do under floating.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.