Question

Monetary policy has a​ ________ effect on aggregate demand in​ a(n) ________​ economy, and fiscal policy has a​ ________ effect on aggregate demand in​ a(n) ________ economy.

Answer 1

Answer:

Greater; Open; Greater; Closed

Explanation:

Aggregate demand of economy refers to the total demand for goods and services in an economy at particular period of time.

A closed economy refers to one that has no imports or exports; in order words it is closed from foreign trade with other economies. Thus, fiscal policy would have a greater effect in this economy.

Open economy is the opposite of a closed economy; it allows foreign trade and the aggregate demand of the economy is better influenced by the monetary policy.