An increase in the marginal propensity to import will cause equilibrium GDP to:

Name: An increase in the marginal propensity to import will cause equilibrium GDP to:
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Question

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An increase in the marginal propensity to import means that a higher percentage of each additional dollar of income is spent on imported goods, which reduces the amount of spending that goes towards domestic goods and services. This decrease in domestic spending results in a decrease in equilibrium GDP.

An Increase in the Marginal Propensity to Import Will Cause