lesson 15 - multipliers

Question 1

multiplier effect

Answer 1

when change in spending leads to greater effect to the gdp, gov spends 100 but the real gdp is +400 –> multiplier effect 4

Question 2

change in autonomous spending

Answer 2

changes in spending in regard to change that is not in income

Question 3

mpc

Answer 3

marginal propensity to consume
the proportion of additional income you are likely to spend

Question 4

mps

Answer 4

marginal propensity to save
the proportion of additional income you are likely to save

Question 5

expenditure multiplier

Answer 5

the magnitude of how much real gdp changes in response to autonomous change in aggregate spending

Question 6

tax multiplier

Answer 6

ratio of total change in real gdp caused by change in taxes