Economics · International Trade Multiplier
If the Marginal Propensity to Import (MPI) is zero, what happens to the foreign trade multiplier?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It becomes less than the closed-economy multiplier
- 2It reduces to zero
- 3It becomes strictly greater than the closed-economy multiplier
- 4It becomes equal to the closed-economy investment multiplier✓
Correct answer
It becomes equal to the closed-economy investment multiplier
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