Which one of the following statements is the most accurate?

A.Fiscal policy has the same effect on employment under fixed and flexible exchange rate

B.Fiscal policy affects employment less under fixed than under flexible exchange rate

C.Fiscal policy affects employment more under fixed than under flexible exchange rate

D.Fiscal policy cannot affect employment under fixed exchange rate but does affect output under flexible exchange rate

E.None of the above statements is true.

Answer: C

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