The ________ multiplier is smaller than the ________ multiplier.

Name: The ________ multiplier is smaller than the ________ multiplier.
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Question

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The open economy multiplier is smaller than the closed economy multiplier because in an open economy, some of the increase in demand resulting from fiscal expansion is met by imports, which leaks out of the domestic circular flow of income, reducing the multiplier effect compared to a closed economy where all spending is on domestically produced goods and services.

The ________ Multiplier Is Smaller Than the ________ Multiplier

The Multiplier Is Smaller Than the Multiplier