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In reality, households will not simply split an increase in income between saving and consumption of domestic output. A fraction of the additional income will

In reality, households will not simply split an increase in income between saving and consumption of domestic output. A fraction of the additional income will go toward the payment of taxes, and a fraction will go to purchases of foreign goods (imports). Accounting for the effects of taxes and imports willincrease the multiplier effect you found earlier.

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