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[3) We want to compare the overall multiplier of two neighboring cities: -- Fredsville, a highly industrialized & nancial economy, and -- Luis-Berg, an economy
[3) We want to compare the overall multiplier of two neighboring cities: -- \"Fredsville", a highly industrialized & nancial economy, and -- "Luis-Berg", an economy that has experienced recent contraction, whose tax base is increasing to make up for the city's budget shortfalls. Calculate the multiplier for each city's economy, then select the statement below the chart that is most true. Fredsville LuisBerg Propensity to Save: 5% 8% Propensity to Tax: 5% 7% Balance of Imports over Exports: 5% 4% a) Fredsville's multiplier is 6+, and LuisBerg's multiplier is 5+, indicating that the dollar in Fredsville goes farther in expanding the local economy, b) LuisBerg's multiplier is lower, indicating it costs less to borrow funds from its local financial institutions, c) The cost of education in Fredsville is cheaper due to a more efcient economic base for public and private services
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