(a)
What is the spending multiplier, when
Explanation of Solution
We have
Also,
Thus, multiplier is calculated as
Hence, the value of multiplier is
Concept Introduction:
Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure
Also, multiplier can be measured from the leakages
Where
(b)
What is the spending multiplier, when
Explanation of Solution
We have
Also,
Thus, multiplier is calculated as
Hence, the value of multiplier is
Concept Introduction:
Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure
Also, multiplier can be measured from the leakages
Where
(c)
What is the spending multiplier, when
Explanation of Solution
We have
Also,
Thus, multiplier is calculated as
Hence, the value of multiplier is
Concept Introduction:
Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure
Also, multiplier can be measured from the leakages
Where
(d)
What is the spending multiplier, when
Explanation of Solution
We have
Also,
Thus, multiplier is calculated as
Hence, the value of multiplier is
Concept Introduction:
Multiplier is defined as the ratio of change in equilibrium income with the initial change in autonomous expenditure
Also, multiplier can be measured from the leakages
Where
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