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

MONETARY POLICY, What are the instruments of monetary policies

What are the instruments of monetary policies

Good to peanut butter, Bread is a related good to peanut butter: show on th...

Bread is a related good to peanut butter: show on the graph of the market for peanut butter, the impact on the price and quantity from an increase in the price of bread.

Determine the rate of economic growth , Determine the rate of economic grow...

Determine the rate of economic growth in UK With regard to economic growth, a good starting point for evaluation and analysis is the fact that rate of economic growth in UK has

Supply function for product, Suppose the supply function for product X is g...

Suppose the supply function for product X is given by Qsx = -50 + 0.5Px - 5Pz. A. How much of product X is produced when Px = $500 and Pz = $30? B. How much of product X is p

Define the term- wages and income, Define the term- Wages and income R...

Define the term- Wages and income Remember that by wage we mainly mean what you receive for working one hour, whereas income is the total revenue from all sources over a longe

Estimate the interest rate and minimize risk, 1. In December 1979 it was po...

1. In December 1979 it was possible to buy a January 1980 contract in gold at the New York Commodity Exchange for $487.50 per ounce and sell an October 1981 contract for $614.80 on

Explain the labor market in the cross model, Q. Explain the labor market in...

Q. Explain the labor market in the cross model? In cross model, both P and W are exogenous andconstant. Hence real wage is constant and it is not essentially equal to the equil

Aplia Chapter Questions, Need answers for the questions (Chapters 10, 11 & ...

Need answers for the questions (Chapters 10, 11 & 12) Please see attached questions. Thanks!

Revealed preference approach, REVEALED PREFERENCE APPROACH The downward...

REVEALED PREFERENCE APPROACH The downward slope of the demand curve was justified on the basis of utility derived by the consumer. But specification of consumer tastes in form

Describe about monetary policy, Q. Describe about Monetary policy? By m...

Q. Describe about Monetary policy? By monetary policy we mean policy directed at controlling the money supply and interest rates. In most nations, central bank is responsible f

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