Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 11, Problem 3CQ
To determine
The concept of multiplier principle, its determinants, and effect of multiplier in the economy.
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Chapter 11 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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- Which of the following statements best describes the multiplier effect in economics? A. The process of reducing government spending to stimulate economic growth. B. An increase in consumer saving when government expenditure decreases. c. A phenomenon where an initial increase in spending leads to a more significant overall increase in economic output. D. The concept of a fixed relationship between inflation and unemployment rates.arrow_forwardThere might be many factors (economic and non-economic) that affect the size of the multiplier. What are some that you think could influence its size? Which ones do you think would make it larger, and which are more likely to make it smaller?arrow_forwardWhat is the minimum value of multiplier?arrow_forward
- What is the multiplier effect during a recession and full employment?arrow_forwardIf an economy were already at its potential GDP (ie its full-employment GDP), what would happen to the value of the multiplier? please help asap thank uarrow_forwardWhich best describes why the multiplier exists? When people spend money, that money ends up in the pockets or bank accounts of other people or organizations, who then use that money in some way. The multiplier exists because money spent today is always more valuable than money spent in the future, due to inflation and interest rates. When people see other people spending money, they know that the economy is about to improve, leading them to spend more money. When people see the government spending more money, they realize that the government thinks that prices are low; thus, they believe it is a good time to buy things.arrow_forward
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