The formula to determine the multiplier(M) is:
M = 1 / (1 – MPC)
where:
MPC=Marginal propensity to consume
What Is a Multiplier?
A multiplier is a broad term in economics that refers to an economic factor that, when increased or changed, causes increases or changes in many other related economic variables. In terms of GDP, the multiplier effect causes total output gains to be greater than the change in spending that caused it.
Typically, the term multiplier refers to the relationship between government spending and total national income. The deposit multiplier is another multiplier used to explain fractional reserve banking.
Often the multiplier formula is considered to be too simple because it ignores some real-world complications. The Reason is:
Option A. The formula ignores the impact of an increase in GDP on consumption.
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The correct answer is A) prevent monopolies.
Financial regulatory agencies focus on preventing monopolies because monopolies can be negative in a capitalist economy.
A monopoly is when one company has almost complete control over one specific market. For example, John D. Rockefeller was considered a monopoly by many people as his company Standard Oil controlled roughly 90% of all oil created in the US during the late 19th century. This type of control by one company can have a negative effect on the consumers. This is due to the fact that the monopoly has very little competition. Since there are few (if any) companies that can compete with the monopoly, the company that has cornered the market may have the chance to raise prices as high as they want. This is due to the fact that there is no other source to get this good from. This is why the government regulates the development of monopolies.
I just looked this up so I’m sorry if this is wrong but
1- osmosis
2- homeostasis
3. Photosynthesis
