2.4.4 The multiplier

Question 1

Marginal propensity to consume (MPC)

Answer 1

The proportion of any change in income that is spent rather than saved

Question 2

Marginal propensity to import (MPM)

Answer 2

the change in total spending on imported products following a change in income.

the higher the MPM, the greater the outflow of extra income in the circular flow of income

Question 3

Marginal propensity to save (MPS)

Answer 3

The change in total savings arising from a change in household disposable income

Question 4

Marginal propensity to tax (MPT)

Answer 4

the change in taxation following a change in income

Question 5

Marginal propensity to withdraw (MPW)

Answer 5

the proportion of additional earnings that are taken out of the circular flow of income (savings, tax, imports)

MPS + MPT + MPM
marginal propensity to save + marginal propensity to tax + marginal propensity to import

Question 6

Multiplier

Answer 6

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Question 7

Multiplier process

Answer 7

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Question 8

Multiplier ratio

Answer 8

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