What is the multiplier? If MPC =0.75, what is the value of the multiplier in the simple model of the economy?
What will be an ideal response?
The multiplier is the change in equilibrium GDP divided by a change in autonomous expenditure. In the simple model of the economy, the multiplier = 1/(1-MPC) which equals 1/(1-0.75 ) = 4
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A) at an unemployment rate of zero B) at an inflation rate of zero C) at potential GDP D) above potential GDP
Approaching a business cycle trough we find actual real GDP ________ natural real GDP, so inflation is ________
A) below, slowing down B) below, speeding up C) above, slowing down D) above, speeding up
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a. Both fish prices and quantity increased. b. Fish prices increased and quantity remained unchanged. c. The draft had no effect on the fish market. d. Fish prices decreased and quantity increased. e. Fish prices increased and the quantity decreased.
The central bank of Rudisia purchases government bonds by using the money that commercial banks keep as deposits with the central bank. It pays an interest of 2 percent on the deposits and charges the commercial banks about 2.5 percent per check for processing checks. It sends back the extra money to the government treasury. Therefore, it can be said that: a. the central bank of the country is
financially self-supporting. b. the central bank of the country acts as the treasurer of the government. c. the central bank of the country acts as the lender of the last resort of the government. d. the central bank of the country ensures that the deposits of customers are insured.