(b)(ii) Using appropriate data, explain the significance of the multiplier in determining whether quantitative easing should be employed by the EU. [6]
{"Image DocumentName": "(b)(ii) Using appropriate data, explain the significance of the multiplier in determining whether quantitative easing should be employed by the EU. [6]", "Image ImageDescription": "Significance of the multiplier. [Highlighting the implications of high leakages] Since MPW is high, this would mean large amounts of leakages with increases in national income. As such, with each increase in national income, there would be lesser money being passed around in the economy in the inner flow. [Policy implication of a small multiplier] This would mean that the EU has a small multiplier and thus would require a large increase in money supply in order to attain a large increase in real GDP. This might not be feasible, as it requires the government to buy large amounts of bonds and financial assets from commercial banks at a time when most of its governments are in budget deficit.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}