In the Basic Model of a Small Open Economy,if the Government

Multiple Choice

In the basic model of a small open economy,if the government encourages investment,say through an investment tax credit,investment:

A) increases and is financed through an increase in national saving.
B) increases and is financed through an increase in exports.
C) increases and is financed through an inflow of foreign capital.
D) does not increase; the interest rate rises instead.