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The Effect of a Sustained Increase in Government Spending (Or

Question 18

Multiple Choice

The effect of a sustained increase in government spending (or investment) on income


A) could be larger or smaller in an open economy than in a closed economy.
B) is larger in an open economy (i.e. one with substantial foreign trade) than in a closed economy (i.e. one with little foreign trade) .
C) is the same regardless of whether the economy is open or closed.
D) is smaller in an open economy than in a closed economy.

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