Suppose that autonomous consumption increases

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Suppose that autonomous consumption increases but that, unlike the situation in the simple Keynesian model of this chapter, some of this autonomous consumption increase is spent on imports (say an amount equal to MPM times the autonomous consumption increase) in the “first round” of the multiplier process. What would this mean for the size of the open-economy multiplier in comparison to the open-economy multiplier in the text?

Reference no: EM13981561

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