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MPC and Marginal Propensity to Import (MPm)

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68. In an open economy, MPC = 0.6, MPm = 0.2. This implies that:

A) MPS in the open economy is lower than in the closed economy.
B) MPS = 0.4 only if the economy were closed.
C) in the open economy, if GDP increases by 200 spending on consumption = 120.
D) in the open economy, if GDP increases by 200 spending on imports increases by 40.
E) B and D.

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MPC and Marginal Propensity to Import (MPm) help is offered. An open economy is analyzed.

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