Page 140 - DECO201_MACRO_ECONOMICS_ENGLISH

Unit 7: Concept of Multiplier

8. Show the working of a dynamic multiplier. Notes
9. Explain the concept of foreign trade multiplier.
10. You are given the following information about an economy:
Consumption function, C = 1000 + 0.5 (Y – T)

Investment, I = 2,000 crores.
Government expenditure = 1,000 crores
Taxes = 1,000 crores
(i) Calculate the tax multiplier.

(ii) Explain the working of the tax multiplier intuitively.
Answers: Self Assessment

1. True 2. True
3. False 4. True
5. Multiplier 6. Autonomous
7. income 8. MPC

9. lesser 10. Government spending
11. closed 12. True
13. False 14. True

15. True
7.7 Further Readings

Books Dr. Atmanand, Managerial Economics, Excel Books, Delhi.
Edward Shapiro, H. B. Jovanovich, Macro Economic Analysis.
R. L. Varshney, K. L. Maheshwari, Managerial Economics, Sultan Chand & Sons,
New Delhi
Thomas F. Dernburg, Macro Economics, Mc Graw-Hill Book Co.

Online links http://tutor2u.net/economics/content/topics/macroeconomy/multiplier.htm

http://www.econlib.org/library/Enc/KeynesianEconomics.html
http://www.investorwords.com/2621/investment_multiplier.html

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