The Effect of a Sustained Increase in Government Spending (Or

Multiple Choice

The effect of a sustained increase in government spending (or investment) on income

A) could be larger or smaller in an open economy than in a closed economy.
B) is larger in an open economy (i.e. one with substantial foreign trade) than in a closed economy (i.e. one with little foreign trade) .
C) is the same regardless of whether the economy is open or closed.
D) is smaller in an open economy than in a closed economy.