The presence of imports ______________the size of the U.S. multiplier because with an increase of U.S. real GDP, ______________.
A) increases; U.S. firms can sell goods to other countries
B) decreases; U.S. consumers buy goods from other countries
C) decreases; U.S. firms can sell goods to other countries
D) increases; U.S. consumers buy goods from other countries

Question

Quizplus · Accepted Answer

The presence of imports decreases the size of the U.S. multiplier because as U.S. real GDP increases, U.S. consumers are more likely to buy goods from other countries instead of domestically, leading to a decrease in the multiplier effect.

The Presence of Imports ______________The Size of the U