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Assume leakages out of the circular flow are 33% of additional income. Required: a) Determine the size of the multiplier effect. (1 mark) b) If
Assume leakages out of the circular flow are 33% of additional income. Required: a) Determine the size of the multiplier effect. (1 mark) b) If the government is spending money to help increase the country's gross domestic product (GDP), identify how the multiplier can be increased to make the government spending more effective. (1 mark) c) Identify two government fiscal policies that create a positive demand shock. (2 marks) d) Provide an example of a leakage out of the circular flow. (1 mark)
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