Answer to Question #66879 in Macroeconomics for himani
a) Ineffectiveness of fiscal policy under flexible exchange rate
b) Nominal rigidity in wage rate and prices
b) Nominal rigidity describes a situation in which the nominal price is resistant to change. Complete nominal rigidity occurs when a price is fixed in nominal terms for a relevant period of time. Partial nominal rigidity occurs when a price may vary in nominal terms, but not as much as it would if perfectly flexible.
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