Mpc and marginal propensity to import


Problem: In an open economy, MPC = 0.6, MPm = 0.2. This implies that:

A) MPS in the open economy is lower than in the closed economy.

B) MPS = 0.4 only if the economy were closed.

C) In the open economy, if GDP increases by 200 spending on consumption = 120.

D) In the open economy, if GDP increases by 200 spending on imports increases by 40.

E) B and D.

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Macroeconomics: Mpc and marginal propensity to import
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