An Increase in Domestic Demand Will Have Which of the Following

Multiple Choice

An increase in domestic demand will have which of the following effects in an open economy?

A) A smaller effect on output than in a closed economy and no effect on the trade balance.
B) A smaller effect on output than in a closed economy and a negative effect on the trade balance.
C) A smaller effect on output than in a closed economy and a positive effect on the trade balance.
D) A larger effect on output than in a closed economy and a negative effect on the trade balance.
E) A larger effect on output than in a closed economy and a positive effect on the trade balance.