What is the main reason why monetary policy has a stronger effect in an open economy than in a closed economy?
A) Changes in the price level affect net exports.
B) Changes in the price level affect exchange rates.
C) Changes in exchange rates affect output.
D) Changes in the interest rate affect exchange rates which,in turn,affect net exports.
E) Changes in exchange rates affect the interest rate which,in turn,affects net exports.
Correct Answer:
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