An Increase in the Marginal Propensity to Import Will Cause

question 38

Multiple Choice

An increase in the marginal propensity to import will cause:

• A) the multiplier to increase and a given change in government spending to have a larger effect on domestic output.
• B) the multiplier to increase and a given change in government spending to have a smaller effect on domestic output.
• C) the multiplier to decrease and a given change in government spending to have a larger effect on domestic output.
• D) the multiplier to decrease and a given change in government spending to have a smaller effect on domestic output.
• E) the multiplier to decrease and a given change in government spending to have no effect on domestic output.

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Definitions:

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