Author Question: Assume a closed economy, that taxes are fixed, and the marginal propensity to consume is equal to ... (Read 107 times)

jman1234 · **on:** Jun 29, 2018

Assume a closed economy, that taxes are fixed, and the marginal propensity to consume is equal to 0.8. What is the government spending multiplier?

A) 10 B) 5 C) 4 D) 3

Question 2

In an open economy, the government purchases multiplier will be larger the

A) larger the marginal propensity to consume. B) smaller the marginal propensity to import.
C) smaller the marginal income tax rate. D) All of the above are correct.