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The multiplier and the accelerator

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Question 9

An economy has the following marginal leakages:

  • Marginal propensity to save = 0.10
  • Marginal rate of taxation = 0.10
  • Marginal propensity to import = 0.05

Its government plans to increase national income (GDP) from €600bn to €720bn. By how much should government spending increase in order to achieve this objective?

A

€30bn

B

€48bn

C

€120bn

D

€480bn

Markscheme

The multiplier and the accelerator Questions

  1. A Level
  2. /Economics
  3. /The multiplier and the accelerator

22 exam-style questions on OCR A Level Economics The multiplier and the accelerator. Each one has a worked solution and a mark scheme showing where the marks go.

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