If the "Multiplier" in a Keynesian Open Economy Is 2

question 23

Multiple Choice

If the "multiplier" in a Keynesian open economy is 2.0, this is consistent with which one of the following combinations of the marginal propensity to consume (MPC) and the marginal propensity to import (MPM) ? (Assume that there is no government sector.)

• A) MPC = 0.7, MPM = 0.2
• B) MPC = 0.3, MPM = 0.2
• C) MPC = 0.8, MPM = 0.2
• D) MPC = 0.5, MPM = 0.2

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