Changes in the money supply in an open economy, as compared to a closed economy,
A) are likely to have a smaller effect on AD because the secondary effect of exchange rates will offset the changes created by monetary disturbances.
B) are likely to have a greater effect on AD because of the secondary effect that exchange rates have on exports.
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.
Correct Answer:
Verified
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