If the "multiplier" in a Keynesian open economy is 2.0, this is consistent with which one of the following combinations of the marginal propensity to consume (MPC) and the marginal propensity to import (MPM) ? (Assume that there is no government sector.)
A) MPC = 0.7, MPM = 0.2
B) MPC = 0.3, MPM = 0.2
C) MPC = 0.8, MPM = 0.2
D) MPC = 0.5, MPM = 0.2
Correct Answer:
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