Assuming that the increase in the value of the dollar in the foreign exchange market has a greater impact on aggregate demand than on aggregate supply, an increase in the United States budget deficit will raise Real GDP
A) more in an open economy than in a closed economy.
B) more in a closed economy than in an open economy.
C) to the same level irrespective of whether it is a closed or an open economy.
D) none of the above (i.e. Real GDP will decrease)
B
Economics
You might also like to view...
What will be the likely effect of an increase in the demand for American goods in the markets of Mexico on the demand for dollars and the exchange rate between dollars and pesos?
What will be an ideal response?
Economics
In the above figure, at the equilibrium level of real GDP, there is
A) positive saving. B) negative saving. C) zero saving. D) a negative tax rate.
Economics