Question 1
The marginal propensity to consume domestic goods is the
◦
MPC -
MPM.
◦
MPC +
MPM.
◦
MPC -
MPS.
◦
MPC +
MPS.
Question 2
The open-economy multiplier ________ the closed-economy multiplier.
◦ is larger than
◦ equals
◦ is smaller than
◦ It can be smaller or larger than the closed-economy multiplier, depending on the size of
MPM and
MPC.