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An economy begins importing (no exports). People begin to spend 20% of any increase in national income on imported goods. The aggregate expenditure before importing would be AE=1000+0.6Y, equilibrium being GDP=2,500 and the multiplier, 2.5.
...What are the size of the multiplier and the equilibrium level of national income after trade opens with a marginal propensity to import of 20%.?
...What are the size of the multiplier and the equilibrium level of national income after trade opens with a marginal propensity to import of 20%.?