Answer to Question #299236 in Macroeconomics for topaztee

Question

The Nottinghamshire Research Observatory in England calculated that students who attend Nottingham Technical University spend about £2,760 each in the local economy for a total of £50.45 million. In total, the impact of their spending on the local economy is £63 million. “University Brings in £250m to Economy,” Nottingham Evening Post, November 4, 2004, p. 37. Calculate the size of the student spending multiplier

Answer 1

The size of the student spending multiplier is:

$m = 250/50.45 = 4.96.$