Reference no: EM131174089
Why is the multiplier for contractionary fiscal policy smaller in an open? economy?
A. Contractionary fiscal policy increases the? deficit, which raises the interest? rate, which reduces the foreign exchange value of the? dollar, which increases net exports.
B. Contractionary fiscal policy reduces the? deficit, which raises the interest? rate, which raises the foreign exchange value of the? dollar, which increases net exports.
C. Contractionary fiscal policy reduces the? deficit, which reduces the interest? rate, which reduces the foreign exchange value of the? dollar, which decreases net exports.
D. Contractionary fiscal policy reduces the? deficit, which reduces the interest? rate, which reduces the foreign exchange value of the? dollar, which increases net exports.
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