For open economy aggregate demand is equal to Consumption + Investment + Government expenditure.

True

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False

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Solution

The correct option is B False
An open economy is an economy in which there are economic activities between the domestic country with the other countries.

Hence, for an open economy, aggregate demand is equal to Consumption + Investment + Government expenditure + (X-M) where X is the income from Exports and M is the expenditure on imports
AD = C + I + G + (X-M)

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