Why is fiscal policy less effective in an open economy than in a closed economy?

Question

Quizplus · Accepted Answer

Expansionary fiscal policy has all of the above effects. It raises demand for imports, which reduces aggregate demand, it raises interest rates, which raises the value of the currency, and it raises the value of the currency, which reduces demand for exports. Therefore, fiscal policy is less effective in an open economy than in a closed economy.

Why Is Fiscal Policy Less Effective in an Open Economy