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

Energy supply, What happens to the extraction path if the choke price falls...

What happens to the extraction path if the choke price falls

Calculate average cost pricing , Indicate whether each of the following sta...

Indicate whether each of the following statements is true, false, or uncertain, and explain your answer.  Your grade will depend primarily on the quality of your explanation.

What is inflation, Q. What is Inflation? Inflation between two points i...

Q. What is Inflation? Inflation between two points in time is defined as percentage increase of price index between these two points in time.  Comments: Price inde

Determine the appropriate interval-hypotheses , 1. Practice identification...

1. Practice identification of proper analysis type (1-Sample Z, 1-Sample t, 2-Sample t, Paired t, etc). 2. Practice hypothesis testing. 3. Practice interpretation of sta

Analysis of direct material, What is most likely to go wrong in the analysi...

What is most likely to go wrong in the analysis of direct material and other direct costs and what could be done about it.

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

Describe about price level and time, Q. Describe about Price level and time...

Q. Describe about Price level and time? We are hardly interested in the value of price level at a certain point in time. What we are interested in is percentage change in the p

Production possibility curve, PRODUCTION POSSIBILITY CURVE As we have s...

PRODUCTION POSSIBILITY CURVE As we have seen, the essence of economic analysis is the problem of scarcity and choice. We know that limited productive resources compel individua

Director of admissions at kinuza university, The director of admissions at ...

The director of admissions at Kinuza University in Nova Scotia estimated the distribution of student admissions for the fall semester on the basis of past experience. What is the e

Aggregate supply - long run equilibrium:graphical analysis, Long Run Equili...

Long Run Equilibrium:Graphical Analysis In the long run the natural rate of output is the level of output to which the economy will tend to adjust in the long run. This indicat

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