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

Question

Quizplus · Accepted Answer

When the marginal propensity to import increases, it means that a larger portion of any increase in income will be spent on imports rather than on domestically produced goods and services. This reduces the domestic economic impact of an initial increase in spending, leading to a decrease in the value of the multiplier.

If the Marginal Propensity to Import Increases, Then the