Which of the Following Statements Is True

question 11

Multiple Choice

Which of the following statements is true?

• A) In an open economy, the smaller a nation's marginal propensity to import, the smaller the multiplier.
• B) In an open economy, the larger a nation's marginal propensity to consume, the smaller the multiplier.
• C) In an open economy, the larger a nation's marginal propensity to export, the smaller the multiplier.
• D) In an open economy, the larger a nation's marginal propensity to import, the smaller the multiplier.

---

Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced.

Output

The amount of goods or services produced by a company, sector, or economy.

Fixed Cost

Costs that do not vary with the level of output or production, such as rent, salaries, and insurance premiums.

Average Total Cost

The total cost of production divided by the number of units produced, representing the per-unit cost of production.