Assume a model with income taxes in which imports increase proportionally to national income. Which of the following is FALSE?
A) the expenditure multiplier will increase with an increase in the marginal propensity to import
B) the expenditure multiplier will increase with a decrease in the marginal propensity to save
C) the expenditure multiplier will decrease with an increase in the marginal propensity to save
D) the expenditure multiplier will decrease with an increase in the marginal income tax rate
E) the expenditure multiplier will decrease with an increase in the marginal propensity to import
Correct Answer:
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