In an open economy,if the marginal propensity to save s = .20 and the marginal propensity to import m = .30,then what should be the foreign trade multiplier?
A)2
B)5
C)3)33
D)10

Name: In an open economy,if the marginal propensity to save s = .20 and the marginal propensity to import m = .30,then what should be the foreign trade multiplier? A)2 B)5 C)3)33 D)10
Brand: Quizplus
Rating: 5.0 (36 reviews)

Question

Quizplus · Accepted Answer

The foreign trade multiplier is calculated as 1 / (s + m) = 1 / (0.20 + 0.30) = 1 / 0.50 = 2.

In an Open Economy,if the Marginal Propensity to Save S