An economy is initially closed to trade and has no government sector, with a marginal propensity to consume (MPCMPCMPC) of 0.75. The government then introduces a flat-rate income tax, resulting in a marginal propensity to tax (MPTMPTMPT) of 0.10. Simultaneously, the economy opens to international trade, leading to a marginal propensity to import (MPMMPMMPM) of 0.15.
Assuming the marginal propensity to save (MPSMPSMPS) remains at its original rate out of national income, what is the new value of the national income multiplier?
1.331.331.33
2.002.002.00
2.502.502.50
4.004.004.00
