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In Goa, India, the multiplier effect of iron ore exports is calculated to be 1.62 (Ta,...

In Goa, India, the multiplier effect of iron ore exports is calculated to be 1.62 (Ta, 2003). Calculate the impact of an additional 1,000 rupees of iron ore exports on the economy of Goa.
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Answer #1

Change in Real GDP demanded at each price level = Multiplier * Initial Change in Component of Aggregate Demand
Change in Real GDP demanded at each price level = 1.62 * 1,000 = 162 rupees.

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