Which one of the following statements is the most accurate?

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

B.Fiscal policy affects output more under fixed than under flexible exchange rate

C.Fiscal policy affects output less under fixed than under flexible exchange rate regimes.

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

E. None of the above statements is true.

Answer: B

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