A-Level CAIE Economics A2 9.1.1—Multiplier process Question Bank

• The multiplier process:

- definition of the multiplier

- formulae for and calculation of multiplier in a closed and open economy, with and without a government sector

- calculation of:

- average and marginal propensities to save (aps and mps)

- average and marginal propensities to consume (apc and mpc)

- average and marginal propensities to import (apm and mpm)

- average and marginal rates of tax (art and mrt)

- national income determination using AD and income approach with the multiplier process

- calculation of effect of changing AD on national income using the multiplier