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At the monetary policy meeting in February 2021, the central bank of Mexico cut its policy the rate for the first time since September in an effort to stimulate the economy. However, after the United States government announced in March 2021 the introduction of a new financial stimulus package to boost the US economy, the Governor of the Mexican central bank announced that the board would consider the impact of the US fiscal stimulus in the Mexican economy, and whether it is necessary to change their monetary response. Explain how a US fiscal stimulus may affect the Mexican economy and why the central bank may respond to it. (100 words max)

At the monetary policy meeting in February 2021, the central bank of Mexico cut its policy the rate for the first time since September in an effort to stimulate the economy. However, after the United States government announced in March 2021 the introduction of a new financial stimulus package to boost the US economy, the Governor of the Mexican central bank announced that the board would consider the impact of the US fiscal stimulus in the Mexican economy, and whether it is necessary to change their monetary response. Explain how a US fiscal stimulus may affect the Mexican economy and why the central bank may respond to it. (100 words max)

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter12: Fiscal Policy, Incentives, And Secondary Effects
Section: Chapter Questions
Problem 8CQ
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At the monetary policy meeting in February 2021, the central bank of Mexico cut its policy

the rate for the first time since September in an effort to stimulate the economy. However, after

the United States government announced in March 2021 the introduction of a new financial

stimulus package to boost the US economy, the Governor of the Mexican central bank

announced that the board would consider the impact of the US fiscal stimulus in the Mexican

economy, and whether it is necessary to change their monetary response.

Explain how a US fiscal stimulus may affect the Mexican economy and why the central bank

may respond to it. (100 words max)

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