Question

Under a fixed exchange rate regime, can a country aain both internal and external

balances using only expenditure-changing policy? Use the related graphical tool and a

verbal explanation. Also, make sure you explain the meanings of “expenditure-changing”

and “expenditure-switching” policies in your answer.

Answer 1

Under a fixed exchange rate regime, can a country aain both internal and external balances using only expenditure-changing policy? Use the related graphical tool and a verbal explanation. Also, make sure you explain the meanings of “expenditure-changing” and “expenditure-switching” policies in your answer. 

A expenditure-switching is when changes in the budget without changes amount budget. For exemple: 

the govermen stops to finance one sector and starts to finance another on similar amount.