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In an open economy, what factor can reduce the value of the multiplier?
  • a)
    Increased government spending.
  • b)
    Decreased exports.
  • c)
    Increased savings.
  • d)
    Decreased taxes.
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
In an open economy, what factor can reduce the value of the multiplier...
In an open economy, an increase in imports (decreased exports) can act as a leakage from the multiplier process and reduce the value of the multiplier.
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In an open economy, what factor can reduce the value of the multiplier?a)Increased government spending.b)Decreased exports.c)Increased savings.d)Decreased taxes.Correct answer is option 'B'. Can you explain this answer?
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