If the Marginal Propensity to Import (M)is Greater Than Zero,the

question 84

Multiple Choice

If the marginal propensity to import (m) is greater than zero,the income-expenditure multiplier is smaller than when m is equal to zero because

• A) as income increases,some of the additional consumption expenditure will be on imported goods.
• B) as income increases,less consumption expenditure will be on imported goods.
• C) as income decreases,there will be additional consumption expenditure on imported goods.
• D) as income increases,there will be a decrease in consumption expenditure.
• E) as income increases,there will be an increase in the amount of taxes paid.

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Definitions:

Taxed Twice

A situation where the same income or financial transaction is subject to taxation twice, often seen with corporate dividends taxed at both the company level and again at the shareholder level.

Egalitarian Society

A community or society in which social equality in terms of wealth, status, and power is emphasized and maintained.

Saving

The act of not spending a portion of income and setting it aside for future use, often in a deposit account or as an investment.

Deficits

The situation that arises when a government, company, or individual spends more money than it receives in income or revenue over a specified period.