simple multiplier . . . (1 Viewer)

[ToO LaZy ^*]

how do i do this?

 

[KungPow]

Don't really have a caulculator handy but i'll give it a shot
Well by definition the multiplier is how an increase in national income exceeds national demand or something? So consumption is increasing by 60 and income is increasing by 100. So 60*k=100 if i am not mistaken?

Thus k would be 10/6 or 1/2/3. Did you get an answer with that?

 

[ToO LaZy ^*]

nope..the answer is 2.5

 

[KungPow]

*shrugs*
Beats me then. I'm sure that's the method I used for some other exam.

 

[ToO LaZy ^*]

actually, i've worked it out...

MPC = @C / @Y
= 480-420 / 600-500
= 60 / 100
= 0.6

.: K = 1 / 1-MPC
= 1 / 1-0.6
= 2.5

OR

MPS = @S / @Y
MPS x 100 = 40
MPS = 0.4
.: K = 1 / 0.4
=2.5

booyeah!

 

[Wild Dan Hibiki]

hey i remember doing that question the other day. wat do you do if they ask you to find like the dollar amount that is injected into the economy?

 

[ToO LaZy ^*]

well...don't you just use the multipler multiplied by the injected amount?

*shrugs*

 

[Wild Dan Hibiki]

*shrugs*, maybe i should find an example question

 

[ToO LaZy ^*]

i gots me another question..

Y C I
0 1000 500
1000 1750 500
2000 2500 500
...
...
6000 5500 500

If investment were to increase by 500 the equilibrium level of national income would rise to
a) 4000
b) 6000
c) 8000
d) 10000
????????????????????

 

[Wild Dan Hibiki]

investment equals savings right?

so 500/1000 is the mps i think..... *shrugs*

 

[CaR]

Also related to the simple multiplier...

How can the simple multiplier affect economic activity?

 

[ToO LaZy ^*]

the answer is c)....for some reason.

 

[launcher169]

i got the answer: i calculate the MPC which is the change in C over the Change in Y
and subsituted it into the mulitplier formula = 1/1-MPC and i got 4.
then i mulitplied the increase of 500 = 2000
then by accounting the increase with the previous value for investment
i got 2500.

So, now the equilibrium for national income is Y = C + I.
C = 5500 and I = 2500
therefore the equilibrium for Y must equal 8000.

hope that helped

also the simple multiplier affects economic activity by describing the effect that a initial change in autonomous expenditure is multiplied to give a large change in national Y

 

[rumour]

Launcher- that is only half the eq. income equation.
Here is how I worked it out:
For eq. income:
C+I=C+S
0.75Y + 1000 +500= 0.75Y +1000 + 0.25Y -1000
Gives you eq. income of $6000

& the MPS= 0.25
therefore the multiplier amount= $2000

So the answer is $8000

 

[ToO LaZy ^*]

i got the answer: i calculate the MPC which is the change in C over the Change in Y
and subsituted it into the mulitplier formula = 1/1-MPC and i got 4.
then i mulitplied the increase of 500 = 2000
then by accounting the increase with the previous value for investment
i got 2500.

So, now the equilibrium for national income is Y = C + I.
C = 5500 and I = 2500
therefore the equilibrium for Y must equal 8000.

hope that helped

also the simple multiplier affects economic activity by describing the effect that a initial change in autonomous expenditure is multiplied to give a large change in national Y

i don't get the bit in bold...

 

[ToO LaZy ^*]

Launcher- that is only half the eq. income equation.
Here is how I worked it out:
For eq. income:
C+I=C+S
0.75Y + 1000 +500= 0.75Y +1000 + 0.25Y -1000
Gives you eq. income of $6000

& the MPS= 0.25
therefore the multiplier amount= $2000

So the answer is $8000

C+I=C+S
0.75Y + 1000 +500= 0.75Y +1000 + 0.25Y -1000

can you explain how you got this equation?..im really confuzzled right about now..

 

[rumour]

C+I=C+S
0.75Y + 1000 +500= 0.75Y +1000 + 0.25Y -1000

can you explain how you got this equation?..im really confuzzled right about now..

Well to find eq. income, AD must equal AS, right?

& AD=s+c, while AS=c+i (They may be round the wrong way )

Remember when you did the graphs of income?
with the 45 degree line & everything?
On the graph Eq. income was where the S+C graph intersected with the C+I graph.

& using the figs. in the question I found C= 0.75Y + 1000, I=500, S=0.25Y -1000

I hope that helps
Do you get it now?

 

[ToO LaZy ^*]

mmm..sorta
maybe its because i've never seen this income graph -_-"..

 

[rumour]

mmm..sorta
maybe its because i've never seen this income graph -_-"..

Well if I can be bothered I'll post it up soon

 

[ToO LaZy ^*]

Well if I can be bothered I'll post it up soon

you'll be my e-best friend if you do. :uhhuh: