What do you mean by multiplier effect, Macroeconomics

Assignment Help:

Q. What do you mean by multiplier effect?

Loans and deposits in banks give rise to a significant multiplier effect. We use a simple instance to explain this effect. Consider the bank K-bank with total deposits of 10,000 (millions or whatever). K-bank is aiming for a reserve ratio of 10% of deposits. At the instance it has lent 9,000 and has 1,000 in reserve - exactly meeting their desired reserve ratio.


Related Discussions:- What do you mean by multiplier effect

Abnormal profits, explain the terms abnormal profits and normal profits

explain the terms abnormal profits and normal profits

How growth are improved living standards, How growth are improved living st...

How growth are improved living standards The two main benefits of growth are improved living standards and technological advancement. As an economy grows, the output of

Analysis the net benefits of cleanup are maximized, Consider the case of c...

Consider the case of cleaning up chemical contamination at an industrial site. The marginal benefits of additional cleanup are decreasing as the amount of cleanup increases. Howeve

Liberalisation and changing sources of fdi, Liberalisation and Changing Sou...

Liberalisation and Changing Sources of FDI: European countries  had been major sources of FDI inflows  to India until 1990. However, their relative importance declined in the

What are economic growth and the growth rate, What are economic growth and ...

What are economic growth and the growth rate? Economic grow: It rise in a country is real level of national output like measured through Gross Domestic Product (GDP). Wh

Clasical model., if we impose any rule and regulation on clasical model lik...

if we impose any rule and regulation on clasical model like not expoit polutionso what is effect on factor of clasical model

What are long run and short run, What are long run and short run? Lon...

What are long run and short run? Long run: It is the time period wherein all inputs cannot be fixed. Short run: It is the time period within which at least one in

Mathematical presentation of indifference curve, Mathematical Presentation:...

Mathematical Presentation: Consider the utility function U = U(x 1 , x 2 ). Differentiating totally, we get the following: dU = U 1 dx 1 + U 2 dx 2 = 0 (as along the indiffe

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd