The actual multiplier effect in the U.S. economy is less than the multiplier effect in the text examples because

Question

Multiple Choice
the real-world MPS is larger than the MPS in the examples.
in addition to saving, households use some of any increase in income to buy imported goods and to pay additional taxes.
the gap between the nominal interest rate and the real interest rate widens as the economy expands or contracts.
the MPC in the United States is greater than 1.

Answer 1

The correct choice is:

in addition to saving, households use some of any increase in income to buy imported goods and to pay additional taxes.

This option explains that the actual multiplier effect in the economy is lower than the theoretical multiplier because part of the income generated through the multiplier process is spent on imports or taxes rather than remaining in the domestic economy to create further rounds of economic activity.