Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 10, Problem 8RQ
To determine
Multiplier.
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In the country of Guadelope, in 2019 GDP increased by $8 million. In the same year, the level of
investment in the country was $2 million. What is the multiplier?
Select one:
O a. 6.
O b. 5.
c. 4.
d. 1/4.
What is the multiplier effect in economics? A. The tendency of consumers to save rather than spend B. The tendency of firms to reduce production during a recession C. The amplification of changes in spending through the economy D. The reduction of government spending to control inflation
In order for the economy (GDP) to be grow and take advantage of the multiplier effect, which one of these should be done?
a. Increase agricultural production
b. Increase taxes
c. Increase the number of banks nationwide
d. increase the manufacturing sector
e. Increase government spending
f. all of the choices
Chapter 10 Solutions
Macroeconomics
Ch. 10.2 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.2 - Prob. 3QQCh. 10.2 - Prob. 4QQCh. 10.5 - Prob. 1QQCh. 10.5 - Prob. 2QQCh. 10.5 - Prob. 3QQCh. 10.5 - Prob. 4QQCh. 10 - Prob. 1DQCh. 10 - Prob. 2DQ
Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
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- SHORT ANSWER QUESTIONS Increase in foreign holdings of assets in the United States Exports of goods Imports of services Statistical discrepancy Net transfers Exports of services Imports of goods Income payments on investments Increase in U.S. holdings of assets in foreign countries Income received on investments b. the balance of trade c. the balance on the financial account $3,288 31. The following are hypothetical data on the U.S. balance of payments. You can assume the balance on capital account is zero. Use the data to calculate the following (SHOW YOUR WORK) a. the balance on the current account d. statistical discrepancy -$29 1 64 694 -1,520 -444 -3,286 545 12. State how each of the following will affect the relative values of the U.S. dollar and the British pound (say which currency appreciates and which currency depreciates): (a) U.S. citizens switch from buying stock in U.S. companies to buying stock in British companies. (b) The inflation rate in the United States decreases…arrow_forwardUse the diagram to answer the question which one of the following will increase the size of the multiplier? A. an increase in the level of net exports B. An increase in the marginal propensity to consume C. an increase in the marginal propensity to save D. a reduction in the level of government spendingarrow_forwardDuring 2019, a country reported that its real GDP increased by $3.0 billion. The multiplier for this economy is known to be equal to 10.Which of the following might have caused the increase in real GDP? Question 12Answer a. Exports increased by $0.3 billion. b. Investment decreased by $0.3 billion. c. Exports decreased by $0.3 billion. d. Imports increased by $0.3 billion. e. Government expenditure on goods and services increased by $3 billion.arrow_forward
- Which best describes why the multiplier existarrow_forwardUse the graph to answer the questions that follow. a.What is the value of the MPC?b.What is the value of the MPS?c.What is the value of the multiplier?d.What is the amount of unplanned investment at aggregateoutput of 300, 900, and 1,300?arrow_forward1. If an increase in investment spending of $20 million results in a $200million increase in equilibrium real GDP, thenA. the multiplier is 10.B. the multiplier is .1.C. the multiplier is 100.D. the multiplier is 1.arrow_forward
- if a $200 billion increase in invest spending creats $200 billion new income in the first round of the multiplier process and $120 billion in second round, the MPS in the economy is A. 0.4 B. 0.6 C. 0.2 D. 0.3arrow_forwardIf the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase by: Select one: a. $2 billion b. $8 billion. C.$15 billion. d. $3 billion.arrow_forward2. If a $580 billion initial increase in spending leads to a $10850 billion change in real GDP, how big is the multiplier?arrow_forward
- The value of multiplier depends on the _____arrow_forwardScenario 34-1. Take the following information as given for a small, imaginary economy: • When income is $10,000, consumption spending is $6,500. • When income is $11,000, consumption spending is $7,250. Refer to Scenario 34-1. The multiplier for this economy is a. 7.00. b. 1.53. c. 4.00. d. 2.85.arrow_forwardIf GDP is $3,400 billion, the multiplier is 5, and I rises by 15, what is the new level of GDP? The new level of GDP is $ billion.arrow_forward
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