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SingaporeEconomicsQuick questions
National Income and Macroeconomic Aims
Quick questions on AD-AS equilibrium and the multiplier explained: H2 Economics
5short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is macroeconomic equilibrium?Show answer
Macroeconomic equilibrium is where aggregate demand equals aggregate supply, fixing the equilibrium real output and price level. If AD exceeds AS at the current price level, the price level and output are bid up; if AS exceeds AD, they fall, until the two are equal.
What is the size of the multiplier?Show answer
The smaller the leakages (the smaller MPW), the larger the multiplier; the larger the leakages, the smaller it is. So a high propensity to save, to tax, or to import gives a small multiplier.
What is q1?Show answer
Define the multiplier. [2 marks]
What is q2?Show answer
An economy has MPW of . Calculate the multiplier. [2 marks]
What is q3?Show answer
Explain why an open economy with a high propensity to import has a small multiplier. [3 marks]
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