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CAIE A-Level Economics 9.1.1 Multiplier Process

Practise calculating marginal propensities and closed or open economy multipliers, deriving income changes and evaluating how saving, taxation and imports weaken repeated spending.

Syllabus
2026–2028
Course
Economics 9708
Level
A2

Exam points

  • calculate MPC, MPS, MPM or marginal tax rates from changes rather than average levels
  • choose the multiplier formula for the economy's sectors and total marginal leakages
  • multiply an autonomous injection by the multiplier or divide an income gap to find the required injection

9.1.1—Multiplier process question 1

[Maximum number: 1]

In a two-sector economy, autonomous consumer expenditure increases by $ 100 billion, autonomous investment expenditure increases by $ 200 billion, and the marginal propensity to consume is 0.5.

What will the increase in National Income be?

A

$ 150 billion

B

$ 300 billion

C

$ 450 billion

D

$ 600 billion

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