The larger the marginal propensity to import, the __________ during each round of spending and __________ the resulting spending multiplier.
A)greater the leakage; the smaller
B)smaller the leakage; the smaller
C)smaller the leakage; the larger
D)greater the leakage; the larger
E)smaller the injection; the larger

Question

Quizplus · Accepted Answer

A larger marginal propensity to import means more income is spent on imports, leading to greater leakage from the domestic economy, which reduces the spending multiplier.

The Larger the Marginal Propensity to Import, the __________ During