Answer to Question #327815 in Macroeconomics for poun

Question

Using the multiplier process, explain the effect of a rise in investment on output and price in

an economy.

Answer 1

Multiplier process means that increasing of investment will lead to increasing of output in some times. It is connected with the reason, that the incomes increased, because investment create new work places and it gives economy boost, because people spend this money and make workers earn more, which increase investment and price.