Practice The Multiplier Effect - 2.2.5 | Chapter 2: Theory of Income and Employment | ICSE Class 12 Economics
K12 Students

Academics

AI-Powered learning for Grades 8–12, aligned with major Indian and international curricula.

Professionals

Professional Courses

Industry-relevant training in Business, Technology, and Design to help professionals and graduates upskill for real-world careers.

Games

Interactive Games

Fun, engaging games to boost memory, math fluency, typing speed, and English skills—perfect for learners of all ages.

Typing
Memory
Math
English Adventures
Knowledge

2.2.5 - The Multiplier Effect

Enroll to start learning

You’ve not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.

Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Define the multiplier effect in your own words.

💡 Hint: Consider how spending creates more spending.

Question 2

Easy

What is the marginal propensity to consume?

💡 Hint: Think about how much of extra money people tend 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 decrease in spending leads to a decrease in income.
  • An initial spending increase results in a greater increase in income.
  • It has no real impact on employment levels.

💡 Hint: Think about how spending can lead to a domino effect in the economy.

Question 2

True or False: The marginal propensity to consume is inversely related to the multiplier effect.

  • True
  • False

💡 Hint: Consider the relationship between consumption and income generation.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

If the government increases spending by $1 million and the MPC is 0.8, calculate the expected increase in national income.

💡 Hint: Use the multiplier formula to find the total impact.

Question 2

Analyze how a sudden drop in consumer confidence to an MPC of 0.5 would change the effects of a $1 million investment. What would the implications be on economic growth?

💡 Hint: Re-calculate the multiplier with the new MPC to see the difference.

Challenge and get performance evaluation