I Am Completely Confused On The Multiplier I Am Looking For Some Help.

I am completely confused on the multiplier.... I am looking for some help.?

As a result of the influx of prospective gold miners and celebrity gawkers, local businesses and some national chains have increased investment spending by $5 mil, building everything from motels to big box stores.
1.If the local marginal propensity to consume is 0.8, by how much has increased investment spending raised local gross domestic product and income?
2.the local unemployment rate remains above the full employment level by 4 percentage points, even after the influx if new investment. If local GDP was $600 mil before the injection of new investment spending, by how much, in dollar figures, would local GDP still have to increase to reach the full employment level?
3.The city government is proposing an aggressive spending program to increase employment and raise local GDP to the full employment level. How much additional government spending would be required to accomplish that goal?
4.. By how much would local taxes have to be cut in order to close the GDP gap and achieve full employment? Is this tax cut greater than, less than, or equal to the additional government spending required in (c) above? Why?
5. It is estimated that the opening of big box retailers in Wretched Mess will reduce spending by local residents across the border in Canada by $5 mil annually, and increase cross-border spending by Canadian residents by approximately $2 mil annually. By how much will Wretched Mess’s local GDP increase as a result of these changes in shopping habits?

Unit multipliers and coverting?

You actually answered your own question in the meters to centimeters one. The unit conversion factor makes use of the fact the 100 cm = 1 m. When you set these up as a ratio: 100 cm/1 m it equals 1. As you know anything multiplied by one equals itself. So when you multiply by your original quantity by the unit conversion factor it will only change the units. You just need to make sure you set it up the right way: either 100 cm/1 m or 1 m/100 cm. The unit desired is the one that goes on top. The unit you will cancel out goes on the bottom.

In your question the meters cancel out and you are left with the desired units of centimeters:

(34 m)(100 cm/1 m) = 3400 cm

For your second question you will need two unit conversion, one to go from miles to feet and one to go from feet to inches.

1 mi = 5280 ft
1 ft = 12 in

So:
6 mi = (6 mi)(5280 ft/1 mi)(12 in/ 1 ft) = 380160 in

One step at a time if you like:
6 mi = (6 mi)(5280 ft/1 mi) = 31680 ft
The miles cancel out and you are left with feet.
Next step:
31680 ft = (12 in/1 ft) = 380160 in
The feet now cancel out and you are left with inches.

If the MPC is .75 what is the multiplier?

The multiplier is not a dollar amount. The formula is 1/1-MPC or alternatively 1/MPS and MPS + MPC =1. It is a measure of how many times the same piece of money will be spent. The first time a dollar will be spent $1 is spent. If 25% of this is then saved, .75 will be spent, and then 75% of that will be spent, etc. Thus the answer is 1/.25 = 4

The multiplier helps explain......?

The answer is A. Gov't spending is money that goes directly into the economy shifting aggregate demand right: When the govt spends $, it is increasing the demand for goods and services which puts more money into the hands of workers (employers may have to hire more workers to keep up with demand for goods and services or pay higher wages to attract more workers). The workers in turn, spend more money on goods and services (they buy more stuff, putting more $ back into the economy, again shifting demand) and so on. So it's exponential.

$20M put into the economy times the multiplier (whatever that happens to be) = the amount the economy actually expands by, so if the multplier is 4, $80M would actually make its way into the economy.

Use Lagrange multiplier techniques to find the local extreme values of f(x, y) = x2 + y2 + 2x + 1 subject to the constraint x2 + y2 = 16.?

g(x,y) = x^2+y^2+2x+1+ λ (x^2+y^2-16)

∂g/∂x = 2x+2 + 2xλ = 0
x(2+2λ ) = -2
x = -1 /(1+λ )

∂g/∂y = 2y+2yλ = 0
2yλ = -2y
y=0

∂g/dλ = x^2+y^2-16 = 0
1/(1+λ )^2 + 0^2 - 16 = 0
1/(λ +1)^2 = 16
(λ +1)^2 = 1/16
λ +1 = 1/4 , -1/4
λ = -3/4 , -5/4

x= -1/(1-3/4) = -4
y = 0
(-4,0) is one solution

x= -1 / (1-5/4) = 4
y=0
(4,0) is another solution

f(4,0) = 4^2+0^2 + 2(4) + 1 = 25 (maximum)
f(-4,0) = (-4)^2 + 0^2 + 2(-4) + 1 = 9 (minimum)

MPC = dC/dY , and MPC is the multiplier (1/[1-c]). correct?

Yes MPC=ΔC/ΔY or the change in Consumption over the change in disposable income.

And yes that is a multiplier but let's rewrite it a little bit.

M=(1/1-MPC)

It can be a multiplier for any aspect of GDP except for Tax
Ex. ΔY=ΔG*M
This would show how much government spending would have to change to have the national income change.

The formula C=Co + c Y is the Consumption function. Let rewrite it a little bit differently.

C=MPC*Y +a

a the autonomous consumption ( the amount you spend that doesn't depend on Yd i.e. food [you gotta eat no matter what])
MPC (you know)
Y (disposable income)
C is consumption.

If you know your algebra then this should look familiar. Say y=mx+b. The consumption function is just a line that you can find for any given Y and MPC, you can see how much people will spend.

Macroeconomics - MPS, expenditure and tax multiplier?

Assume that the consumption function for the economy is C = 124 + 0.7Y.

- Calculate the MPS.
- Calculate the expenditure multiplier.
- Calculate the tax multiplier.
- If the government increases spending by $87m, calculate the maximum amount by which the economy could expand.


i'm really confused so if someone could help me with even one of those questions that would be brilliant. thanks!

If the money multiplier is 4, the required reserve ratio is...?

The basic idea is that the bank loans out (1-RR) dollar for each dollar it owns, then gets a deposit for (1-RR) dollars from that and loans the (1-RR)(1-RR) dollars, and so on forever. When you do the math involved in this it turns out that the bank loans 1/RR dollars for each dollar it loans out, meaning the money is multiplied by a factor of 1/RR.

So the relationship is M = 1/RR

Here 4 = 1/RR => RR = .25