Why value of multiplier is low
In poor countries people spend a big percentage of their income so that APC and MPC are high. Yet, the value of multiplier is low. Explain why?
Expert
Working of the multiplier method is based on one basic supposition: that there exists, surplus capacity in the economy therefore that whenever consumption expenses rises (implying raise in demand) there is an equivalent increase in production (implying rise in income). However poor countries lack in production capacity.
Accordingly, if demand increases (in terms of rise in consumption expenses), there is increasing pressure of demand on existing output (that is, implying inflation or rise in prices) instead of increase in output or income.
What is the difference between profit and producer surplus?
When cost of a foreign currency increases its supply too increases. Elucidate why?
DISCUSS the experience of high GNP countries and low GNP with regard to PQLI.
Explain in short the income approach to evaluate national income. Answer: Under income method to compute the National Income, the steps given below have been taken into account: A) First of all production units tha
Define bank rate policy? How does it operate as a technique of credit control? Answer: Bank rate is the rate at which the central bank provides loans to the commerc
Definition of surplus: It is a condition in which quantity supplied is more than quantity demanded. To remove the surplus, producers will minimize the price till the market reaches to equilibrium.
Family member to macroeconomics, the microeconomic analysis: (w) was emphasized through economists prior to the Great Depression. (x) is related with the effects of extensive government policies. (y) focuses upon economic development
I have a problem in economics on Expanding consumption of a good. Please help me in the following question. Your consumption of a good tends to expand if it’s: (i) Relative marginal utility surpasses its relative price. (ii) Total utility is les
How can governments seek to control their national economies through fiscal and monetary policies?
What is "demand-pull" inflation?
18,76,764
1960387 Asked
3,689
Active Tutors
1458112
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!