the value of the simple multiplier.

Related BrainMass Solutions

• Value of the multiplier

  218536 Economic Model: Value of the Multiplier In the simple economic model with no government or foreign sectors, the value of the multiplier is defined as: 1/MPC. 1/(1-MPC). 1/(MPC-1) 1/(MPC+1).

• calculation of the value of the simple deposit expansion multiplier

  A calculation of the value of the simple deposit expansion multiplier is depicted.

• Money multiplier, credit creation, required reserve ratio

  Use a simple Balance Sheet for a typical bank, which has $5,000 of deposits, a required reserve ratio of 10 percent, and excess reserves of $0. a. What is the value of money multiplier? b.

• Simple spending multiplier

  (Simple Spending Multiplier) For each of the following values for the MPC, determine the size of the simple spending multiplier and the total change in real GDP demanded following a $10 billion decrease in autonomous spending: a.

• Money Multiplier and Reserve Ratio

  The solution explains the concept of money multiplier through a simple example.

• government purchases multiplier vs net tax multiplier

  This is why the simple tax multiplier has a negative value. * Second, the household sector reacts to the change in disposable income caused by the change in taxes by changing both consumption and saving.

• slope of the consumption function

  a.What is the sum of saving and net taxes when desired spending equals real GDP? Explain. b.What is the value of the multiplier? c.Explain why the multiplier is related to the slope of the consumption function.

• Money multiplier

  The maximum value for the money multiplier is equal to the reciprocal of the reserve (requirement) ratio, so that M = 1 / r where M = the money multiplier r = the

• government spending multiplier

  The government spending multiplier is 1/MPS and the tax multiplier is -MPC/MPS = -(1-MPS)/MPS.). Its absolute value is always one less than the simple multiplier and it is always negative.