Suppose That Autonomous Consumption Increases but That, Unlike the Situation

question 22

Short Answer

Suppose that autonomous consumption increases but that, unlike the situation in the simple Keynesian model of this chapter, some of this autonomous consumption increase is spent on imports (say an amount equal to MPM times the autonomous consumption increase) in the "first round" of the multiplier process. What would this mean for the size of the open-economy multiplier in comparison to the open-economy multiplier in the text?

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Definitions:

σ

The symbol representing the standard deviation in statistics, a measure of the amount of variation or dispersion in a set of values.

Dispersion

A statistical measure that describes the spread of or variation in a set of data values.

Variation

The difference in data set values from the mean, highlighting the dispersion or spread of a set of data points.

Quartile

A quartile is a type of statistical measure that divides a data set into four equal parts, revealing the spread and tendencies of the data.