UNICREDIT Bank accepted deposited savings of $50mln to be invested in equity shares. HALAL Productive firm used this capital to buy machinery and raw materials, and to expand their production capacity. The recipients of the $50mln, as a result of sales of their goods and services, are assumed to save 10% of their income to be deposited at UNICREDIT counters and the cycle continues. 

Required:

Calculate the saving multiplier explain its relationship to the average saving ratio explain the relationship between saving ratio and the accumulated savings.Quantify the effect of the saving multiplier on the initial saving deposit of $100mln. 

Answer rating: 100% (QA)

The saving multiplier represents the total increase in savings that results from an initial injectio... View the full answer