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

Question

Quizplus · Accepted Answer

The presence of imports decreases the size of the U.S. multiplier because when U.S. real GDP increases, U.S. consumers spend more on goods from other countries, leading to a leakage from the domestic spending stream.

The Presence of Imports ________ the Size of the U