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 a positive 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 larger 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