If the marginal propensity to import (m)is greater than zero,the income-expenditure multiplier will be ___________ the value when m is equal to zero.Also,the larger the value of m,the _________ value of the income-expenditure multiplier.

Question

Quizplus · Accepted Answer

When the marginal propensity to import is greater than zero, it reduces the multiplier effect because some of the additional income is spent on imports rather than domestic goods. Therefore, the multiplier is smaller than when m is zero. Additionally, the larger the value of m, the more income is spent on imports, further reducing the multiplier.

If the Marginal Propensity to Import (M)is Greater Than Zero,the