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Changes in the Money Supply in an Open Economy,as Compared

Question 100

Multiple Choice

Changes in the money supply in an open economy,as compared to a closed economy,


A) are likely to have a greater effect on AD because of the secondary effect that exchange rates have on exports.
B) are likely to have a smaller effect on AD because the secondary effect of exchange rates will offset the changes created by monetary disturbances.
C) are the same in either situation.
D) affect investment to a greater degree because foreign investors can create new investment in an open economy.
E) cannot be determined with the available information.

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