In the Simple Keynesian model, if an increase in the level of investment is accompanied by a reduction in the propensity to save, the combined effect of these would be
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1 mark, −0.25MacroeconomicsKeynesian cross and the multiplierThe investment and expenditure multiplierModerateabout 1 min
JNU SSS 2015 Question 47: Keynesian cross and the multiplier
Answer and worked solution
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What this question tests
This question is on The investment and expenditure multiplier, part of Keynesian cross and the multiplier in Macroeconomics.
Why a change in autonomous spending changes income by a larger amount, and what sets its size.
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