The pure Keynesian government spending multiplier, in an open economy, depends on not only the marginal propensity to consume and the income tax rate but also

Question

Quizplus · Accepted Answer

The pure Keynesian government spending multiplier in an open economy is affected by the marginal propensity to import because imports represent a leakage from the circular flow of income, reducing the multiplier effect of government spending. The other options (A, C, D) do not directly impact the multiplier in the same way.

The Pure Keynesian Government Spending Multiplier, in an Open Economy