Why Is Fiscal Policy Less Effective in an Open Economy

question 33

Multiple Choice

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

• A)Expansionary fiscal policy raises demand for imports, which reduces aggregate demand.
• B)Expansionary fiscal policy raises interest rates, which raises the value of the currency, and reduces aggregate demand.
• C)Expansionary fiscal policy raises the value of the currency, which reduces demand for exports.
• D)Expansionary fiscal policy has all the above effects.

Explore communication opportunities and challenges in diverse business environments.

Develop strategies to improve team effectiveness and resolve conflicts.

Understand the concept of determinants of health and their impact on population wellness.

Identify the different levels of prevention and the appropriate nursing interventions associated with each level.