Business, 18.03.2020 01:52 makaylajones74pdxtrk

The multiplier principle is important because it was central to economic theory before Keynes. implies that investment will help stabilize the economy. shows why small shifts in investment have a powerful influence on national income. illustrates why a small change in income causes a large change in saving.

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Answer from: MeowieMeowMeow6500

TRUE

Explanation:

The multiplier causes output to rise by a multiple of what was originally invested. Hence, it is true that it shows why small shifts in investment have a powerful influence on national income, and that it illustrates why a small change in income causes a large change in saving.

The multiplier plays the role of reinforcing induced interaction between consumption, production, factor payments, and income that amplifies autonomous changes in investment, government spending, exports, taxes, or other shocks to the macro economy.

Answer from: lemonsalt9378

A small change in income cause a large change in savings

Explanation:

The focal principle underlying Keynes economic perspective is that any fall in investment will lead to lower interest rate. Ultimately, this reduced interest rate lead to a reduction in savings, boost more investment and spending, and subsequently spiral to a moment of stability.

For Keynes, money is the goal. Thus, the forces of demand and supplying governing money is critical to dictating the state of the economy.

When there is a drop in investment and the need to shore up the liquidity/solvency level arises, there's a remarkable drop in the interest rate. This thus motivates individuals to take advantage of such. With more money in the coffers, individuals are inclined to spending out of there own principally to earn more from the borrowed money, and also to repay the the interest and principal element. A rational individual thus prefers this to savings where he'll earn almost nothing. The resultant of these procedures is the improved economy and/money stability.

Answer from: Quest

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Answer from: Quest

The correct answer would be story

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The multiplier principle is important because it was central to economic theory before Keynes. impli...