Your provincial legislature is debating whether the government should use public funds to encourage motion picture studios to shoot and produce films in your province. The provincial Ministry of Finance issues a report that includes the following statement:

“The average budget for a movie is $70million but our consultants estimate that this will have broader ripple effects across many industries and will boost provincial output by about $210million dollars.”

What multiplier is the Ministry of Finance using to come to this conclusion? Do you think the multiplier is realistic for this scenario?

Study Problems Learning Objective A.1 Measure aggregate expenditure and analyze how it varies with income.