If a country has a small economy, such as Sweden, and the economy is open rather than closed, then the effectiveness of fiscal policy in that country will

A.

be enhanced by real interest rate induced changes in consumption and investment.

B.

be diminished by real interest rate induced changes in consumption and investment.

C.

be enhanced since the real interest rate doesn't change in a small open economy.

D.

be altered in an indeterminate way.

Compared to its effectiveness in a large closed economy, fiscal policy in a large open economy (with a floating exchange rate) is

enhanced

diminished

.