Scenario 10.2 A Hypothetical Open Economy Has a Marginal Propensity to Import

question 38

Multiple Choice

Scenario 10.2
A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7. Assume that the economy is initially in equilibrium.
-Refer to Scenario 10.2. If a tourist visits the country and spends $100 that she brought with her, then what will happen to the equilibrium real GDP?

• A) It will not change
• B) It will increase by $100
• C) It will increase by $200
• D) It will increase by $143
• E) It will increase by $90

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Definitions:

Biological Processes

The processes vital for a living organism to function, including biochemical pathways, cellular growth, and homeostasis maintenance.

Psychological Processes

Internal operations that underlie cognitive and emotional functions, such as perception, memory, and reasoning.

Spouse

A partner in a marriage or civil union, often involving a legal or cultural recognition of their relationship.

Lymphocyte Levels

Measurements of the amount of lymphocytes, a type of white blood cell, which play a significant role in the body's immune defense mechanisms.