The autonomous expenditure multiplier in an open economy is affected by the:
A) marginal propensity to save.
B) marginal propensity to tax.
C) marginal propensity to import.
D) all of the above.

Question

Quizplus · Accepted Answer

The autonomous expenditure multiplier in an open economy is influenced by all these factors: the marginal propensity to save (since it affects how much of additional income is not consumed), the marginal propensity to tax (as it determines the portion of income taken by the government and thus not available for private spending), and the marginal propensity to import (since it affects how much of the additional income is spent on foreign goods and thus does not contribute to domestic income).

The Autonomous Expenditure Multiplier in an Open Economy Is Affected