In an open economy,the government purchases multiplier will be larger the

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The government purchases multiplier in an open economy will indeed be larger when the marginal propensity to import is smaller (because less of the additional income generated by government spending leaks out of the economy through imports), when the marginal income tax rate is smaller (because a smaller portion of additional income is taxed away, leaving more to be spent), and when the marginal propensity to consume is larger (because more of the additional income will be spent, further stimulating the economy). All these factors reduce the leakage from the circular flow of income, thereby amplifying the impact of government spending on the economy.

In an Open Economy,the Government Purchases Multiplier Will Be Larger