The open economy multiplier is calculated as follows:
A) 1/[1-(marginal propensity to consume + marginal propensity to invest)]
B) 1/[1-(marginal propensity to consume + marginal propensity to import)]
C) 1/[1-(marginal propensity to consume + marginal propensity to invest + marginal propensity to import)]
D) 1/[1-(marginal propensity to consume + marginal propensity to invest – marginal propensity to import)]
ANSWER
D
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