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A cross layer approach based on adaptive modulation (AM) at the physical layer and truncated automatic repeat request (ARQ) protocol at the data link layer has been presented. To realize the system the MIMO channel is decomposed into single-input single-output (SISO) channels, then the probability density function in these sub-channels is extracted and approximated by Gamma distribution. An upper bound for instantaneous packet error rate (PER) is extracted considering the ARQ at the data link layer. Then under an average transmit power and packet error rate constraint, the modulation order is optimally adapted, to maximize the average spectral efficiency. A simulation study has also been conducted to examine the systems performance especially its Average Spectral efficiency (ASE). Furthermore, considering delay constraints, the maximum number of ARQ retransmissions is extracted for each sub-channel separately.