Higher export demand __________ output and a higher MPZ __________ output?
Correct answer: C. increase, reduces
- A. reduces, reduces
- B. reduces, increase
- C. increase, reduces
- D. increases, increases
Explanation
Higher export demand is an injection that raises aggregate demand and output. A higher marginal propensity to import increases leakage from the spending multiplier, reducing the resulting increase in output.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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