Monetary policy has a ________ effect on aggregate demand in a(n)________ economy, and fiscal policy has a ________ effect on aggregate demand in a(n)________ economy.
A)weaker; open; weaker; open
B)weaker; closed; stronger; closed
C)stronger; open; weaker; closed
D)stronger; closed; weaker; open
E)stronger; open; stronger; closed

Question

Quizplus · Accepted Answer

Monetary policy tends to have a weaker effect on aggregate demand in an open economy due to capital flows and exchange rate adjustments, while fiscal policy has a stronger effect on aggregate demand in a closed economy because there are no international trade effects to dilute the impact of government spending or taxation changes.

Monetary Policy Has a ________ Effect on Aggregate Demand in A(n)________

Monetary Policy Has a Effect on Aggregate Demand in A(n)