Practice The Multiplier and Its Implications - 3.4 | Chapter 2: Theory of Income and Employment | ICSE Class 12 Economics
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3.4 - The Multiplier and Its Implications

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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Define the multiplier effect in simple terms.

💡 Hint: Think about how one action can create many effects.

Question 2

Easy

What does MPC stand for?

💡 Hint: Remember, it's about how much extra income people choose to spend.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the multiplier effect?

  • A way to measure unemployment
  • The process by which an initial change in spending leads to a larger increase in income
  • An economic theory about interest rates

💡 Hint: Remember it relates to income and spending.

Question 2

True or False: Increasing government spending during a recession can reduce unemployment.

  • True
  • False

💡 Hint: Think about the role of government in stimulating the economy.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

Suppose the government invests $100,000 into a community park, and the MPC is 0.8. Calculate the total income generated in the community.

💡 Hint: Remember to plug the MPC into the formula for the multiplier.

Question 2

During an economic recovery, inflation rises to 5% as government spending increases. Analyze how this inflation impacts the multiplier effect under full employment.

💡 Hint: Consider how increasing prices affect consumer behavior and spending.

Challenge and get performance evaluation