Question

Incorrect Question 3 0/1.5 pts The aggregate demand of an open economy is given by the after-tax domestic consumption C, the investment (which depends on the interest rater), the government spending G and net exports X - M: AD = C+I+G+X-M=co + c (1 – t) T+I(r) + G + X - my Co is autonomous consumption, c, is the marginal propensity to consume, and m is the marginal propensity to import. In the economy's equilibrium this equals its output: AD = Y. Solving for Y yields: Y = (1-6 (1-1) +m) (c + I (r) +G+X) Given this equation, which of the following increases the multiplier? A fall in government spending • A fall in the interest rate. r affects I(r), which in turn affects the level of AD but not the multiplier A fall in the marginal propensity to import. A rise in the tax rate.

could abyone help me answering these questions please!

Answer 1

Answer:

3. A fall in the marginal propensity to import will increase the multiplier. This is because, multiplier=(​ 1/ 1- c2(​ 1- t)​+ m)​

If m increases the value of denominator wi ll increase and value of multiplier wi l l decrease.

6. statement 3 is correct. Rest 3 statements are incorrect. statement 1 and 4 have stabilizing effect during recession.