CHAPTER 30 THE MULTIPLIER

Question 1

Marginal propensity to import (MPM)

Answer 1

The increase in imports divided by the increase in income that caused them.

Question 2

Marginal propensity to save (MPS)

Answer 2

The increase in saving divided by the increase in income that caused them

Question 3

Marginal propensity to tax (MPT)

Answer 3

The increase in tax revenues divided by the increase in income that caused them.

Question 4

Marginal propensity to withdraw (MPW)

Answer 4

The increase in withdraw from the circular flow divided by the increase in income that caused them, this is the same as the sum of marginal propensity to save, tax and import

Question 5

Multiplier or national income multiplier or Keynesian multiplier or real multiplier.

Answer 5

The figure used to multiply a change in an injection into the circular flow, such as investment to find the final change in income. It is the ratio of the final change in income to the initial change in an injection.

Question 6

Multiplier effect or process

Answer 6

An increase in investment or other injection will lead to an even greater increase in income.