Suppose that Federal Reserve policy leads to higher interest rates in the United States

How will this policy affect real GDP in the short run if the United States is a closed economy, and how will it affect real GDP in the short run if the United States is an open economy?

For a closed economy, higher interest rates decrease domestic investment spending and purchases of consumer durables in the short run so that real GDP decreases. For an open economy, higher interest rates decrease domestic investment spending and purchases of consumer durables, as they do in a closed economy. However, in an open economy, higher interest rates also raise the value of the dollar in the foreign exchange market. As a result, net exports will decrease and, therefore, the decrease in real GDP is larger for an open economy than for a closed economy.