Describe how an economy can achieve both internal and external balance

Question

Describe how an economy can achieve both internal and external balance under a fixed exchange rate regime.

17 Oct 2021

Answer :

Word Count : 275

Under a fixed exchange rate regime, an economy can achieve internal balance when there is low unemployment, low inflation, and stable economic growth. This can be achieved through the use of monetary and fiscal policy. For example, if an economy is experiencing inflation, the central bank can use contractionary monetary policy, such as raising interest ______ ___ ___ ________ __________ _______ ________ ____ _________.
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