Fiscal policy is implemented by the federal government, using government spending or taxes whereas monetary policy is implemented by the Federal Reserve, using open market operations, discount rates, and reserve requirement ratios. How would (expansionary or contractionary) fiscal policy and monetary policy affect the current account – exports and imports in goods and services – and the exchange rate, respectively? In what kind of global economic situation would (expansionary or contractionary) fiscal policy and/or monetary policy be used?
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