The multiplier

Question 1

define positive multiplier

Answer 1

an initial increase in an injection leads to a greater final increase in real GDP

Question 2

define negative multiplier

Answer 2

an initial increase decreases in an injection leads to a greater final decrease in real GDP

Question 3

marginal rate of leakage and the multiplier value

Answer 3

assumes that for each £100, 10% is saved, 20% taxed. 20% leaks from the economy in imports

Question 4

mps

Answer 4

marginal propensity to save

Question 5

mpt

Answer 5

marginal propensity to tax

Question 6

mpm

Answer 6

marginal propensity to import

Question 7

mpc

Answer 7

marginal propensity to consume

Question 8

multiplier formula

Answer 8

K = 1 divided by 1-MPC