An economy has a marginal propensity to save (MPSMPSMPS) of 0.15, a marginal propensity to tax (MPTMPTMPT) of 0.25, and a marginal propensity to import (MPMMPMMPM) of 0.20.
The government reduces the basic rate of income tax such that the MPT MPT\,MPT falls to 0.15. Simultaneously, consumers increase their spending on foreign goods, raising the MPM MPM\,MPM by 0.05.
What is the resulting change in the country's national income multiplier?
An increase of approximately 0.150.150.15
A decrease of approximately 0.150.150.15
An increase of approximately 0.330.330.33
A decrease of approximately 0.050.050.05
