In a large open economy, an increase in government spending will lead in the long run to

Name: In a large open economy, an increase in government spending will lead in the long run to
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An increase in government spending in a large open economy typically leads to higher interest rates due to increased demand for loanable funds. Higher interest rates appreciate the domestic currency, making exports more expensive and imports cheaper, thus decreasing net exports.

In a Large Open Economy, an Increase in Government Spending