You are given the following information about a closed economy with no government: Consumption = 115 + 0.6Y Investment = 550 Calculate the value of the multiplier.
You are given the following information about a closed economy with no government:
Consumption = 115 + 0.6Y
Investment = 550
Calculate the value of the multiplier.
Meaning of Money Supply:
In general term, we usually use money supply to mean money circulation, money flow in the economy. Under banking and monetary management terminology, the level and supply of M3 are known as the money supply. The growth rate of broad money (M3) i.e. money supply was not only lowered than the indicative growth but it also witnessed a continuous and sequential deceleration in the last 7 quarters and moderated to 11.2 percent.
The aggregate demand under money supply is the aggregate expenditure in the economy which in effect is made up of; consumption demand (i.e. expenditure) and the investment demand (i.e. expenditure). Thus the level of effective demand will increase if consumption increases or investment increases.
Given:
Consumption (C)= 115 + 0.6Y
Investment (I)= 550
To Find:
Value of Multiplier:
Step by step
Solved in 3 steps
