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: 69% (13 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
51+ 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...
-
What characteristics define strategic communication? Why are those characteristics important?
-
Determine the most appropriate equity-related hedge fund strategy that Shaindy should employ. Justify your response. Jane Shaindy is the chief investment officer of a large pension fund. The pension...
-
Curtis Corporation is beginning to manufacture Mighty Mint, a new mouthwash in a small spray container. The product will be sold to wholesalers and large drugstore chains in packages of 30 containers...
-
Derive the labor supply functions that are associated with the three utility function shown below. Let T = 10, Y = 20, and px = 2. (a) U(l, x) = 0.8 log(l) (1 0.8) log(x) (b) U(l, x) = min[0.8l,...
-
Write a program in MIPS assembly language to convert an ASCII number string containing positive and negative integer decimal strings, to an integer. Your program should expect register $a0 to hold...
-
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...
-
Assign oxidation numbers for each of the elements participating in the following reactions. 2NO(g) + O(g) 2NO(g) 2 Mn+ (aq) + 2HO(l) MnO (s) + Mn+ (aq) + 4H*(aq) LiCoO (s) + C(s) LiC (s) + CoO (s)...
-
Since it was a nice day Leilani decides to go on a hiking trip. If she can average two miles per hour uphill and six miles per hour downhill. Going uphill and down, and if she spends no time at the...
-
for every letter in the alphabet list: Create a variable to store the frequency of each letter in the string and assign it an initial value of zero for every letter in the given string: if the letter...
-
Capital Structure Problem Cerberus Holdings currently has $6.5 million in debt and $9.0 million in equity. Cerberus' beta is 1.27, their weighted average cost of capital is 7.75%, and their statutory...
-
What would be the fastest and easiest way to insert a gene into a very precise location in a gene in a bacterial cell?
-
Terry Tighe Theater Company uses a perpetual inventory system. The adjusted trial balance of Terry Tighe Theater Company at June 30, 2016, follows: (Click the icon to view the adjusted trial...
-
Write about Goals and Contexts for your Rationale Essay What are your personal, academic, and professional goals? What is the context in which you're pursuing your degree? Write the section of your...
-
If the amplifier indicated by the box input impedance of oo, which of the following statements are true ? has an open loop gain as well as Feedback factor (\beta = 1/ R_1\) The feedback is voltage...
-
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...
-
How does the concept of intersectionality, as developed by Kimberl Crenshaw, challenge traditional understandings of identity and social categorization by highlighting the interconnectedness and...
-
To what extent does intersectional scholarship inform policy-making and advocacy efforts aimed at addressing social disparities and promoting equity and justice for marginalized communities ?
-
How can intersectionality contribute to building solidarity and fostering coalitions across diverse social movements, while also recognizing and respecting the distinctiveness of different...
Study smarter with the SolutionInn App