ILO:
a) The multiplier ratio
b) The multiplier process
c) Effects of the multiplier on the economy
d) Understanding of marginal propensities and their effects on the multiplier:
o the marginal propensity to consume (MPC)
o the marginal propensity to save (MPS)
o the marginal propensity to tax (MPT)
o the marginal propensity to import (MPM)
e) Calculations of the multiplier using the formulae 1/(1-MPC) and 1/MPW, where MPW=MPS+MPT+MPM
f) The significance of the multiplier to shifts in AD
a) The multiplier ratio
b) The multiplier process
c) Effects of the multiplier on the economy
d) Understanding of marginal propensities and their effects on the multiplier:
o the marginal propensity to consume (MPC)
o the marginal propensity to save (MPS)
o the marginal propensity to tax (MPT)
o the marginal propensity to import (MPM)
e) Calculations of the multiplier using the formulae 1/(1-MPC) and 1/MPW, where MPW=MPS+MPT+MPM
f) The significance of the multiplier to shifts in AD
Multiplier Ratio
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Watch this video for the concept of the multiplier.
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This video reviews the technical aspects of the multiplier.
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The Multiplier Effect (In less than 5 minutes)
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The Multiplier Effect Explained I A Level and IB Economics
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Multiplier Process
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Explain the importance of the multiplier during the covid crisis. (5 marks)
Layoffs rise at fastest rate EVER in UK - as coronavirus slams economy
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Assess the benefits of a country hosting a global event like the Olympics. (10 marks)
Why Hosting The Olympics Isn't Worth It Anymore
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Effects of the multiplier and marginal propensities
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Examine two factors that the Government must consider when setting the MRT on income tax? (8 marks)
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Explain how the base rate impacts the size of the multiplier. (5 marks)
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Budget 2021: What does tax threshold freeze mean for your take home pay? | ITV News
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Interest Rates Cut To A Record Low | Good Morning Britain
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Calculations of the multiplier
There are 2 formulas that can be used. The choice will be based upon the information provided in the question.
1/(1-MPC)
1/MPW , where MPW=MPS+MPT+MPM
1/(1-MPC)
1/MPW , where MPW=MPS+MPT+MPM
Watch and attempt the practice questions in the video.
The Multiplier - 6 Practice Questions I A-Level and IB Economics
Additional revision activity:
The significance of the multiplier to shifts in AD
Assess the importance of understanding the multiplier when determining Fiscal policy during 2021. (12 marks)
How Will the U.K. Pay Off Its Vast Debt?
Research task:
Explain how a negative multiplier would of influenced the size and duration of the recession that began in 2008.
(5 marks)
Assess the significance of the multiplier for the UK Government during the 2008 recession and how this may of influenced their fiscal policy decisions. (NB - remember fiscal policy involves both G & T) (10 marks)
Explain how a negative multiplier would of influenced the size and duration of the recession that began in 2008.
(5 marks)
Assess the significance of the multiplier for the UK Government during the 2008 recession and how this may of influenced their fiscal policy decisions. (NB - remember fiscal policy involves both G & T) (10 marks)
