16. In the Mundell-Fleming model of a small open economy with a floating exchange rate, a rise in government spending: A) partially crowds out private investment, so that there is a small increase in output. B) fully crowds out private investment so that output does not change. C) attracts foreign capital inflows, thus raising the exchange rate. As a result, net exports fall, but not by enough to offset the impact of the new government spending, so that there is a small increase in output. D) attracts foreign capital inflows, thus raising the exchange rate. As a result, net exports fall by an amount exactly equal to the increase in government spending so that output does not change.