The multiplier

Explain how the multiplier and accelerator affect the overall level of economic activity.

Explain why investment in infrastructure in the less-prosperous regions could help to improve the prosperity of people living in these regions.

A £2 billion rise in government spending has led to an increase of £5 billion in national income.

All other things being equal, what is the value of the marginal propensity to consume?

Extract B (line 9) states: ‘The government spending cuts also severely damaged private-sector jobs.’

With the help of a diagram, explain how a reduction in government spending could increase unemployment in the private sector.

In an economy, the marginal propensity to consume is 0.6. All other things being equal, which one of the following statements is correct?

Extract B (lines 8–9) states ‘If injections into an economy’s circular flow of income increase, then this may generate multiple increases in GDP.’

With the help of a diagram, explain how an increase in injections may generate multiple increases in an economy’s GDP.

The marginal propensity to consume (MPC) in an economy is 0.5. If the MPC increases by 20% the new value of its multiplier will be

Assuming that the value of the marginal propensity to consume is 0.6, which of the