In an Open Economy, Fiscal Policy Has

question 8

Multiple Choice

In an open economy, fiscal policy has:

• A)a smaller impact on aggregate demand as compared to a closed economy.
• B)the same impact on aggregate demand as compared to a closed economy.
• C)a larger impact on aggregate demand as compared to a closed economy.
• D)no impact on aggregate demand.

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Definitions:

Total Assets

The sum of all current and non-current assets owned by a company, indicated on the balance sheet, representing the total resources available to a company.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by shareholder equity.

ROA

Return on Assets, a financial ratio indicating how profitable a company is relative to its total assets, measuring how efficiently those assets are used to generate profit.