Question

2. In Economics, what is the “Multiplier” and what does it show? Is it easier to

control an economy with a High multiplier or one with a Low multiplier? Please explain

Answer 1

Multiplier is nothing but the factor that shows the proportionate change in the endogenous variable when there is a change occurred in that of the exogeneous variable on the whole. Fiscal multiplier is the best example of this where it is the ratio of change of the the GDP with respect to that of change in the government spending levels on the whole. The features of high multiplier includes the fact that it is relatively having plenty of capacity to still work upon where the propensity two important consumer high while low multiplier indicates the capacity is almost used up and also show the chances of high inflation is prevalent and therefore in this regard it can be mentioned that high multiplier is desirable for development