Question

$\frac{1}{1-c}$ gives the economy multiplier and $\frac{1}{1-c+m}$ gives the economy multiplier.

• A. open
• B. mixed
• C. closed
• D. market

Answer 1

Answer: (A), (C)

The correct options are
A open
C closed

The open economy multiplier includes imports, where m is the marginal propensity to import. Therefore, the open economy multiplier is given by $\frac{1}{1-c+m}$.