An Increase in Total Factor Productivity Has Different Effects in an Open

Multiple Choice

An increase in total factor productivity has different effects in an open economy relative to a closed economy because

A) the real interest rate does not change in the open economy.
B) the change in the real interest rate involves a substitution effect only in the open economy.
C) the real interest rate does not change in the closed economy.
D) the real interest rate decreases in the open economy and increases in the closed economy.
E) it is a positive income effect in the closed economy and a negative one in the open economy.