Under the Bretton Woods Agreement, why is the fiscal policy alone insufficient to maintain internal and external balance? Suppose country ‘X’—operating under the agreement—has a lower par exchange...

Under the Bretton Woods Agreement, why is the fiscal policy alone insufficient to maintain internal and external balance? Suppose country ‘X’—operating under the agreement—has a lower par exchange rate against the dollar than the market clearing exchange rate. How does the exchange rate impact the price level of country ‘X’? To control the price level, list suggestions for the policy maker of country ‘X’ regarding valuation of its currency in the international market?