Explain the multiplier intuitively. Why is it that an increase in planned investment of $100 raises equilibrium
Question:
Explain the multiplier intuitively. Why is it that an increase in planned investment of $100 raises equilibrium output by more than $100? Why is the effect on equilibrium output finite? How do we know that the multiplier is 1/MPS?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 71% (14 reviews)
Think of the adjustment that occurs when with the economy at the equilibrium leve...View the full answer
Answered By
Anum Naz
Lecturer and researcher with 10+ years of experience teaching courses in both undergraduate and postgraduate levels. Supervised 17 BA theses, 07 MA theses, and 1 Ph.D. dissertations. Edited and co-authored 2 monographs on contemporary trends in political thought. Published over articles in peer-reviewed journals.
4.80+
11+ Reviews
52+ Question Solved
Related Book For
Principles of Macroeconomics
ISBN: 978-0134078809
12th edition
Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster
Question Posted:
Students also viewed these Business questions
-
Why is it that an increase in a banks ROE might be a sign that the bank is taking on more risk?
-
State how and why each of the following affects the AD curve: a. An increase in government purchases. b. A tax increase. c. An increase in planned investment spending by firms caused by optimism...
-
An economy has a marginal propensity to consume of 0.5, and Y*, incomeexpenditure equilibrium GDP, equals $500 billion. Given an autonomous increase in planned investment of $10 billion, show the...
-
Discuss why you would or would not like to work in an organization like this?
-
Some Catholic organizations propose to build a private independent middle school in a run-down neighborhood in Philadelphia, Pennsylvania. They asked the Redevelopment Authority of the City of...
-
Formulate in full detail the mechanism for the Wolff-Kishner reduction of 1-phenylethanone (acetophenone) to ethylbenzene (see p. 803). Data from page 803. CH3 CH3 1. H;NNH, H:O, diethylene glycol,...
-
Below are the key figures for Gamma plc and Delta plc: (a) Gamma acquires Delta. The criterion selected for calculation purposes is equity value. Calculate the old and new EPS, equity per share, and...
-
Grand Bank Corporation (GBC)Case B Management of GBC commissioned a security review task force to review compliance with corporate security policies and procedures at NCCC. The following observations...
-
Water Drain Water is draining from a tank connected to two pipes. The speed, f, in feet per second at which water drains through the first pipe can be modeled by the function below, where x is the...
-
Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known for its excellent quality and innovation. Recently, the firm conducted a relevant cost analysis of...
-
In each of the following cases, classify the person as cyclically unemployed, structurally unemployed, frictionally unemployed, or not in the labor force. Explain your answers. a. Samuel quit his job...
-
Briefly define the following terms and explain the relationship between MPC and MPS and the relationship between aggregate output and aggregate income. a. MPC b. MPS c. Aggregate output d. Aggregate...
-
Some accountants believe that financial statement analysis is of little benefit as it contradicts the findings of capital markets research. Discuss the findings of capital markets research and its...
-
What do the roles of Statistician and Machine Learning / AI Engineer have in common?
-
An investor made the following investments over 6 months. Each purchase was for $1000.00. Include fractional shares. Calculate the base of the entire investment (Fill out the table below - dollar...
-
In January of the current year, your company purchased a sport utility vehicle (SUV) weighing 6,100 pounds in the amount of $130,000 for business-use only. At December 31st, you (the business owner)...
-
What is the clamping sequence for the MaxPlus?
-
In order to discuss Zeffirelli's Hamlet as a film, you should answer the following questions: 1.Which scenes do you notice that are out of order? Which lines of dialogue are in the wrong scene? Note:...
-
An object moves along the curve C shown in the figure from (1, 2) to (9, 8). The lengths of the vectors in the force field F are measured in newtons by the scales on the axes. Estimate the work done...
-
Select a mass spectrometric technique with the highest mass resolution for identifying an unknown compound being eluted from a liquid chromatography column
-
From either an international newspaper such as the Financial Times, the business section of a local daily business newspaper, or the Internet, look up the prime interest rate, the corporate bond...
-
Despite the European debt crisis, in July 2011, the European Central Bank (ECB) focused on its day job of fighting inflation and lifted its benchmark rate by quarter of a point to 1.5 percent....
-
You play for your college basketball team and enjoy the sport. You have the option to heavily invest in training to become a professional basketball player and earn $1 million per match. However, the...
-
Transaction [4 points] On March 1, fixtures and equipment were purchased for $4,500 with a downpayment of $1,000 and a $3,500 note, payable in one year. Interest of 5% per year was due when the note...
-
Burr Industries has the following events transpire in June of 2022: Event Details Buy Inventory: Buy 6,000 units of inventory for $6/unit on credit. Sell Inventory: Sell 4,765 units of inventory for...
-
to ensure receiables are not overstated on the statement of financial position, they ate reported a. at gross amount b. less interest revenue, if any c. plus bank charges expense, if any d. at their...
Study smarter with the SolutionInn App