I thought I knew this, but down hill… Please can you help to confirm the differences? 1. Shift to Expansionary Monetary Policy. Long term: * Lower rates = Lower value currency * Reduced Imports and increased Exports * Current account surplus; Capital account deficit. Short term: *Consumers temporarily seem to have more cash, and domestic prices increase, so imports are encourged (all happens in a blurr, so fx market initially doesn’t notice!?) * Higher domestic prices discourages exports * Current account defecit and Capital account surplus 2. Shift to Expansionary Fiscal Policy *increases aggregate demand (of which a portion is met by imports, so imports increase) *increases domestic interest rates due to increased gov’t borrowing *Value of currency increases. *Current account defecit, capital account surplus I cannot for the life of me understand how unexpected versus expected impacts the above. Can anyone elaborate please? Thanks,