If the marginal propensity to import increases, then the
A)multiplier will increase in value.
B)multiplier will not change in value.
C)multiplier will decrease in value.
D)effect on the multiplier will depend on what happens to exports.

Question

Quizplus · Accepted Answer

The multiplier decreases because an increase in the marginal propensity to import means more income is spent on imports rather than domestic goods, reducing the overall impact of an initial change in spending on the economy.

If the Marginal Propensity to Import Increases, Then the