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.
Correct Answer:
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