Suppose policy makers pass a budget that results in a tax cut. This tax cut will have a greater impact on net exports when:
A) investment is unaffected by changes in income.
B) the sensitivity of investment to income is smaller.
C) the marginal propensity to import is larger.
D) the economy is closed.
E) the marginal propensity to import is smaller.
Correct Answer:
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Q1: An increase in the marginal propensity to
Q3: Assume a country is open. Given this
Q4: A decrease in the marginal propensity to
Q5: Suppose policy makers want to reduce NX
Q6: An open economy with a low saving
Q7: Which of the following represents the demand
Q8: Which of the following would cause an
Q9: In an open economy, net exports will
Q10: Which of the following will always cause
Q11: Which of the following represents the domestic
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