Question

Give an example of any factor that influence the size of the multiplier​

Answer 1

The size of the multiplier depends upon household's marginal decisions to spend, called the marginal propensity to consume (mpc), or to save, called the marginal propensity to save (mps). It is important to remember that when income is spent, this spending becomes someone else's income, and so o

Step-by-step explanation:

If mpt = 0.4, mpm =0.3 and mps = 0.1.

Then mpw = 0.8. The marginal propensity to consume is 0.2.

Therefore, the multiplier effect will be 1/0.8 = 1.25.

2 Nov 2019

Answer 2

Step-by-step explanation:

Changes in the size of the leakages—a change in the marginal propensity to save, the tax rate, or the marginal propensity to import—will change the size of the multiplier.