Author Question: What is the multiplier? What does it determine? Why does it matter? What will be an ideal ... (Read 55 times)

imowrer · **on:** Jun 29, 2018

What is the multiplier? What does it determine? Why does it matter?

What will be an ideal response?

Question 2

Explain the differences between a change in supply and a change in quantity supplied.

What will be an ideal response?

alexanderhamilton · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The multiplier is the amount by which a change in autonomous expenditure is multiplied to determine the change in equilibrium expenditure and real GDP. A change in autonomous expenditure changes real GDP by an amount determined by the multiplier. The multiplier matters because it tells us how much a change in autonomous expenditure changes equilibrium expenditure and real GDP.

Answer to Question 2

A change in supply refers to a shift of the supply curve, which occurs when one of the variables other than the price of the product changes. A change in quantity supplied refers to a movement along the supply curve, which occurs when the price of the product changes.