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217 What does it mean to say that a government is taking action to support, ts currency? Do you agree with the conclusion that these actions are not effective in the long run if they run counter to the judgment of financial markets? Briefly explain

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When government takes action in the market to support it's currency then it means it has decided to fixed its currency with respect to foreign currency. Under fixed exchange rate regime fiscal policy is considered to be most effective because it helps in influencing the real output. However, in long run the goverment action will not be effective because in order to maintain the fixed rate government has to buy or sell it's foreign reserves which will create problem during the shocks of the market. Therefore, the intervention of government will not be effective in long run.

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