The reason that higher interest rates reduce aggregate demand in an open economy with capital flows is that investment
A) increases generated by higher interest rates are offset by net export decreases.
B) decreases generated by higher interest rates are coupled with net export decreases.
C) decreases generated by higher interest rates are offset by net export increases.
D) increases generated by higher interest rates are coupled with net export increases.
Correct Answer:
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A)uses tariffs.
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