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Chapter 8 [23]
Aggregate Expenditure and
Equilibrium Output
THE Keynesian Theory of Consumption
1. Define aggregate output.

The total quantity of goods and services produced (or supplied) in an economy in
a given period.
Diff: 1 Skill: Definition Topic: aggregate output
AACSB:
2. What is the relationship between consumption and the following economic variables:
household income, wealth, household's expectations about the future, and interest rates?
Consumption is positively related to household income and wealth and
household's expectations about the future, but negatively related to interest rates.
Diff: 1 Skill: Conceptual Topic: consumption
AACSB:
199
Copyright © 2014 Pearson Education, Inc.
200 Case/Fair/Oster, Principles of Macroeconomics, 11th Edition
3. List four determinants of aggregate consumption.

Household income, household wealth, interest rates and households' expectations
about the future.
Diff: 1 Skill: Fact Topic: aggregate consumption
AACSB:
4. In the General Theory, Keynes argued that the amount of consumption undertaken by a
household is directly related to its income. Explain what he meant.
The higher your income, the higher your consumption is likely to be. People with
more income tend to consume more than people with less income.
Diff: 1 Skill: Conceptual Topic: consumption
AACSB:
5. Draw a graph of the consumption function and explain what the vertical intercept means
and the slope. Make sure to label both axes.

The fact that the consumption function crosses the vertical axis at a positive value
simply means that even if household income were zero there would still have to be
consumption for the household to survive. It would either live off savings or
borrow. The slope of the consumption function represents the fraction of each
additional dollar of income that the households choose to consume.
Diff: 1 Skill: Analytic Topic: consumption function

AACSB:

Chapter 8 [23]: Aggregate Expenditure and Equilibrium Output 201
6. Assume a consumption function that takes on the following algebraic form: C = $100 +
.8Y. Assume that Y = $1000 what is the level of consumption at this income level.
C = $100 + .8($1000) = $100 + $800 = $900.
AACSB:
7. Write out the equation for the consumption function in algebraic form and identify each
component.
C = a + bY
C = consumption
a = the amount of consumption when income is zero
b = the fraction of each additional dollar of income devoted to consumption
Y = income
AACSB:
8. Suppose the slope of the consumption function is .75 and there was an increase in
income of $100. Calculate the increase in consumption.
 C = .75 x $100 = $75
AACSB:
9. Compare and contrast the MPC and the MPS. Also explain what these two figures must
always add up to.
The MPC is the marginal propensity to consume. It is the fraction of an increase in
income that is consumed. The MPS is the marginal propensity to save. It is the
fraction of an increase in income that is saved. The MPC and the MPS must
always sum to 1 since there are only two things that one can do with one's income -
consume and save.
Diff: 1 Skill: Definition Topic: MPC and MPS
AACSB:
Figure 23.1
10. Using Figure 23.1 derive the equation for this consumption function.
The consumption function is C = 100 +.75Y
Diff: 1 Skill: Analytic Topic: MPC and MPS
AACSB:

11. Using Figure 23.1 derive the equation for this saving function.
The consumption function is C = 100 +.75Y. Saving is simply income less
consumption. Therefore, the saving function is S = - 100 + .25Y
AACSB:
Figure 23.2
12. Using Figure 23.2 calculate aggregate saving at each income level.
Aggregate saving is simply aggregate income less aggregate consumption.

AACSB:
13. Critically evaluate the following statement. “People can spend more than their income
by borrowing therefore the sum of the MPC and the MPS could actually be greater than
one.”
It could be true that one could consume more than one’s income. However, even
though the MPC in this case might be greater than 1 the MPS would be negative
by the amount by which the MPC exceeds 1. This would imply that the sum of
MPC and MPS would still be equal to 1. Therefore, the statement is false.
Diff: 1 Skill: Definition Topic: MPC and MPS
AACSB:
14. Explain what the aggregate consumption function is.

The aggregate consumption function shows the level of consumption at every level
of income. The upward slope indicates that higher levels of income lead to higher
levels of consumption spending.
Diff: 1 Skill: Conceptual Topic: aggregate consumption function
AACSB:

Aggregate Aggregate
Income Consumption
0 200
80 260
100 275
200 350
15. Using the above figure calculate the marginal propensity to consume between the
aggregate income levels of $80 and $100. Also explain why this consumption function
is linear.
The marginal propensity to consume is equal to $15/$20 = .75. The consumption
function is linear because the marginal propensity to consume is constant and
therefore the slope is the same throughout all income levels.
AACSB:
16. Assume a consumption function of the form C = 200 + .8Y. Derive the saving function
and write out the algebraic representation.
S = Y - C. Therefore S = Y - (200 + .8Y) = - 200 + .2Y
AACSB:
17. Explain the meaning of the consumption function depicted above. Why is this
consumption function unrealistic?
This consumption function says that the level of consumption remains constant no
matter what the level of income is. In other words, consumption is independent of
the level of income, MPC = 0. In the real world we observe that households
typically consume more as their income rises.
AACSB:

18. Fill in the table below assuming the consumption function has the following form: C =
500 + .9Y.
Income Consumption
$0
100
200
300
Income Consumption
$0 500
100 590
200 680
300 770

AACSB:
19. Fill in the consumption table below assuming that the marginal propensity to consume
is constant. In addition, write the algebraic equation for the consumption function.
Income Consumption
$0 $200
100
200
300 425
Income Consumption
$0 $200
1 275
0
0
2 350
0
0
300 425
The equation for the consumption function is C = 200 + .75Y

AACSB:

20. Assume the above consumption function for a hypothetical economy. Write out the
algebraic equation for this function.
First we must calculate the slope. Slope is simply rise over run. Since we have two
points we can easily calculate the slope. At zero consumption is 200 and at 1000
consumption is 1000. Therefore we can write that the change is consumption is
800 and the change in income is 1000 or 800/1000 = .8. The vertical intercept is
200. Thus the consumption function can be written as C = 200 + .8Y
AACSB:
21. Draw a consumption table where autonomous consumption is $200 and the marginal
propensity to consume is .8. Make sure to start with an income level of $0 and increase
by $100 each time up to an income level of $400. Without completing the table any
further determine the level of income where consumption and income are equal. Prove
this algebraically.

In Consump
co tion
me
$0 $200
$1 280
00
$2 360
00
$3 440
00
$4 520
00
The consumption function is C = 200 + .8Y Therefore if C = Y we can write Y = 200

+ .8Y. After rearranging terms this yields .2Y = 200. Solving for Y gives us 1000.
AACSB:
22. What are the four determinants of consumption? Also, explain how a change in each
would bring about a reduction in consumption.
The four determinants are income, wealth, interest rates, and expectations about
the future. A reduction in income will cause individuals to reduce consumption. A
reduction in wealth (assets minus liabilities) will also cause a reduction in
consumption. An increase in the interest rate, by raising the cost of borrowing will
cause a reduction in consumption. And finally, if individuals become concerned
about the future (e.g., future income and/or the state of the economy), they will
reduce consumption.
Diff: 2 Skill: Conceptual Topic: determinants of consumption
AACSB:
23. Assume the saving function for an economy is S = - 200 + .2Y. Derive the consumption
function from this information and show your work.
Since Y = C + S, we can write the consumption function as C = Y - S. In the present
case C = Y - (-200 + .2Y). This leaves C = 200 + .8Y.
Diff: 2 Skill: Analytic Topic: saving function
AACSB:

24. Assume the level of saving that would take place in an economy is - $200 even when
aggregate output is zero. Also assume that the marginal propensity to save is .1. Derive
the algebraic expression for the saving function and the consumption function.
The saving function is S = - 200 + .1Y. Since Y = C + S then C = Y - (-200 + .1Y).
This reduces to C = 200 + .9Y.
Diff: 3 Skill: Analytic Topic: saving and consumption function
AACSB:
Planned investment (I) VERSUS ACTUAL INVESTMENT
25. Explain any differences between actual investment and planned investment. Also, is it
possible for actual investment to be greater than planned investment? If so, explain.
Actual investment represents the amount of investment that takes place during a
given period. Actual investment, therefore, also takes into account any unplanned
changes in inventories. Planned investment represents those additions to the
capital stock that are planned by firms. Yes, it is possible for actual investment to
exceed planned investment. For this to occur, production must exceed sales. In this
case, firms experience an unplanned increase in inventories that causes actual
investment to exceed planned investment.
Diff: 2 Skill: Conceptual Topic: actual and planned investment
AACSB:
PLANNED INVESTMENT AND THE INTEREST RATE (r)
26. In 1995 the Apex television manufacturing company planned to invest $1,100,000 by
building a brand new factory wing at a cost of $1,000,000 and increasing its inventories
by $100,000 worth of television sets. However, by the end of the year the actual amount
of investment for the company was $1,200,000. What could explain this apparent
difference between the company's planned investment and actual investment?
Perhaps the sales of television sets were not as high as they expected. This caused
inventories to accumulate to $200,000 instead of the $100,000 they had planned
for.
Diff: 2 Skill: Conceptual Topic: unplanned investment
AACSB
27. In the simple Keynesian model an increase in consumer spending will increase
investment, and a decrease in consumer spending will decrease investment. Critically
evaluate this theory.
When firms consider investment they also look at prevailing interest rates and the
costs of production to estimate their profit margins. Demand is only one side of the
equation.
Diff: 3 Skill: Conceptual Topic: Keynesian model
AACSB:

THE DETERMINATion OF Equilibrium Output (Income)
28. Assume a two sector economy where C = $100 + .9Y and I = $50. Calculate the
equilibrium level of output for this hypothetical economy. What would the level of
consumption be if the economy were operating at 1400? What would be the amount of
unplanned investment at this level? In which direction would you expect the economy
to move to at $1400 and why?
Equilibrium in a two sector economy is where C + I = Y. In this case that is 100 +
.9Y + 50 = Y. Rearranging terms yields 150 = .1Y. Solving for Y results in an
equilibrium of $1500. If the economy is operating at 1400 the level of unplanned
investment is -$10. Proof: Consumption would be $1360 (100 + .9(1400)). With
investment of 50 this means aggregate spending is $1410. This is $10 above the
level of aggregate output. With inventories being drawn down the expectation
would be that firms would step up production and the economy would expand
beyond $1400.
Diff: 2 Skill: Analytic Topic: equilibrium output
AACSB:
29. Define the significance of equilibrium in the macroeconomics goods market.

Equilibrium in the macroeconomics goods market occurs when planned aggregate
expenditure is equal to aggregate output.
Diff: 1 Skill: Definition Topic: goods market equilibrium
AACSB:
30. Planned aggregate expenditure (AE) equals consumption plus planned investment: AE =
C + I. Discuss the conditions under which equilibrium in the goods market is achieved.
Equilibrium in the goods market is achieved when planned aggregate expenditure
equals aggregate output: C + I = Y. This holds if and only if planned investment
and actual investment are equal.
Diff: 2 Skill: Conceptual Topic: planned and actual investment
AACSB:
Table 23.1
31. Using table 23.1 construct a column for planned aggregate expenditure at each level of
output.

AACSB:
32. Using Table 23.1 calculate a column for the unplanned inventory change at each level
and determine the equilibrium output level from this information.

The equilibrium output level is 500 because this is where the unplanned inventory
change is zero.
Diff: 2 Skill: Analytic Topic: macroeconomic equilibrium
AACSB:
33. Prove through the use of algebra that in a two sector economy saving must be equal to
planned investment at the equilibrium level of output. (Hint: Remember that C + S = Y)
When the economy is in equilibrium AE = Y or C + I = Y. Since there are only two
things that households can do with their income we can write C + S = Y. Therefore
we can combine these two relationships by writing: C + I = C + S. Subtracting C
from both sides yields I = S.
Diff: 2 Skill: Analytic Topic: macroeconomic equilibrium
AACSB:
34. Determine what the level of unplanned investment would be under each of the
following scenarios: a) aggregate output is greater than planned spending, b) aggregate
output is equal to planned spending and c) aggregate output is less than planned
spending.
Unplanned investment or unplanned inventories is equal to output minus planned spending.
Therefore unplanned investment is positive in (a), zero in (b) and negative in (c).
Diff: 2 Skill: Conceptual Topic: unplanned investment
AACSB:
35. Assume planned investment is $50 billion and the economy is currently operating at $7
trillion. Calculate the level of aggregate expenditures and unintended inventories if the
consumption level is $6.9 Trillion.
AE = $6.95 trillion, IU = + $50 billion.
Diff: 1 Skill: Analytic Topic: planned investment
AACSB:
36. Assume consumption is represented by the following: C = 400 + .5Y. Also assume that
planned investment (I) equals 100.
(a) Given the information, calculate the equilibrium level of income.
(b) Given the information, calculate the level of consumption and saving that occurs at
the equilibrium level of income.
(c) Write out the saving function for this economy. What is the marginal propensity to
save?
(a) Y = 1000
(b) C = 900 and S = 100
(c) S = -400 + .5Y; the MPS = .5
Diff: 2 Skill: Analytic Topic: equilibrium income
AACSB:

(a) Now, suppose the level of income is equal to 4000. What is the level of planned
aggregate expenditures at this level of income?What is the value of any unplanned
changes in inventories?
(b) Given the information, calculate the equilibrium level of income.
(c) Given the information, calculate the level of consumption and saving that occurs at
(d) Suppose planned investment falls by 100. Graphically illustrate using the AE - Y
graph the effects of this reduction in planned investment on the economy. Also,
calculate the new level of equilibrium income.
(a) AE = 200 + .9(4000) + 300 = 4100. Unplanned changes in inventories equal
Y - AE = 4000 - 4100 = -100.
(b) Y = 5000
(c) C = 4700 and S = 300
(d) Y = 4000

AACSB:
38. Explain the path to equilibrium when output is greater than planned spending.
When output is greater than planned spending, there is unplanned inventory
investment. Firms planned to sell more of their goods than they sold, and the
difference shows as an unplanned increase in inventories. Equilibrium will be
restored when output is reduced to the point where it is just in line with planned
spending.
Diff: 2 Skill: Conceptual Topic: equilibrium output
AACSB:
39. Assume planned aggregate expenditure exceeds aggregate output (income). Explain
what will happen to unplanned inventories and the adjustment process towards
equilibrium output.
First, there is an unplanned fall in inventories. Firms will increase output.
This increased output leads to increased income and even more consumption. This
process will continue as long as output (income) is below planned aggregate
expenditure. If firms react to unplanned inventory reductions by increasing

output, an economy with planned spending greater than output will adjust to a
new equilibrium, with Y higher than before.
Diff: 2 Skill: Conceptual Topic: equilibrium output
AACSB:
40. Assume an economy with the following consumption and investment function:
C = 100 + .75Y
I = 25
Based on this information fill in the following table:
Aggregate Aggregate Planned Planned Unplanned

Output Consumption Investment Aggregate Inventory
(Income) Expenditure Change
$100
200
400
500
600
800
Put an asterisk next to the aggregate output level that shows equilibrium.
Aggregate Aggregat Plann Planne Unplan

Output e ed d ned
(Income) Invest Invent
Consum Aggreg
ment ory
ption ate
Chang
Expen e
diture
$100 175 25 200 -100
200 250 25 275 -75
400 400 25 425 -25
500 * 475 25 500 0
600 550 25 575 +25
800 700 25 725 +75

AACSB:

41. Assume the following saving function and investment function: S = -200 + .25Y and I =
25. Calculate the equilibrium output level.
Equilibrium output condition is S = I. Therefore -200 + .25Y = 25. Rearranging
terms .25Y = 225. Multiplying both sides by 4, Y = 900.
AACSB:
42. Assume an economy in which saving is -$100 at an output level of zero and the slope of
the saving schedule is 1/10. If the economy is in equilibrium at 1200 calculate the level
of saving and investment
Substituting Y = 1200 into S = -100 + .1Y gives us 20. Since S = I then investment is
20.
AACSB:
43. Assume that one day everyone decides to spend $100 more than they typically would.
Explain why this would not necessarily result in an increase in income or output.
An increase in consumption necessarily means a reduction in savings. This has to
translate eventually to a reduction in investment. In other words it would change
the composition of goods produced but not necessarily the total amount of goods
produced.
Diff: 3 Skill: Conceptual Topic: saving and investment
AACSB:
The multiplier
44. Define an exogenous variable.

A variable that is assumed not to depend on the state of the economy—that is, it
does not change when the economy changes.
Diff: 2 Skill: Conceptual Topic: exogenous variable
AACSB:

(a) Given the information, calculate the equilibrium level of income.
(b) Given the information, calculate the level of consumption and saving that occurs at
(c) Suppose planned investment increases by 100. Calculate the new equilibrium level
of income. Given your answer, what is the size of the multiplier for this economy?
(d) Will the level of saving and consumption change as the economy adjusts to this
change in planned investment? Explain.
(a) Y = 2000
(b) C = 1900 and S = 100
(c) Y = 2400. Y increased by 400 as a result of the 100 unit increase in I. The multiplier
is, therefore, 4.
(d) C will rise as Y rises. S will also rise as Y rises.
AACSB:
46. When planned aggregate expenditure exceeds aggregate output (income), there is an
unplanned fall in inventories. Firms will increase output. This increased output leads to
increased income and even more consumption. How long will this process continue?
This process will continue as long as output (income) is below planned aggregate
expenditure. If firms react to unplanned inventory reductions by increasing
output, an economy with planned spending greater than output will adjust to a
new equilibrium, with output higher than before.
Diff: 2 Skill: Conceptual Topic: unplanned inventories
AACSB:
47. Define the multiplier.

The multiplier is the ratio of the change in the equilibrium level of output to a
change in some autonomous variable.
Diff: 1 Skill: Definition Topic: multiplier
AACSB:
48. Assume a hypothetical economy where all income is consumed. Theoretically what is
the value of the income multiplier in this case?
The income multiplier would be undefined. The reason is that the income
multiplier is equal to one divided by the marginal propensity to save. In this case
that would be zero.
Diff: 1 Skill: Definition Topic: multiplier
AACSB:

49. Suppose there is an economy in which aggregate expenditure is greater than aggregate
output by $30 billion. In addition, firms react by increasing planned investment by $30
billion. Explain why this does not restore equilibrium.
It will not restore equilibrium because the increase in output by $30 billion
generates even more consumption spending. This of course creates more income
and the cycle starts all over again.
Diff: 2 Skill: Conceptual Topic: equilibrium income
AACSB:
50. Why doesn't the multiplier process go on forever?

Only a fraction of the increase in income is consumed in each spending round.
Successive increases in income become smaller and smaller in each round of the
multiplier process until equilibrium is restored.
Diff: 2 Skill: Conceptual Topic: multiplier
AACSB:
51. Suppose an economy is initially in equilibrium at $800 billion and investment increases
by $10 billion. This causes the economy to expand to $1200 billion. Calculate the value
of the multiplier.
The change in output is equal to the multiplier times the change in investment
spending or Y = m x I. Since Y = 400 and I = 10 then the multiplier must be
40.
Diff: 1 Skill: Analytic Topic: multiplier
AACSB:
52. Explain how the following two equations can both be true:
multiplier = 1/MPS multiplier = 1/(1 - MPC)
The reason that both equations are true is because of the identity MPS + MPC = 1.
This is true because there are only two things that one can do with one's income -
consume and save.
Diff: 2 Skill: Analytic Topic: MPS and MPC
AACSB:
53. Theoretically, what should happen to the value of the multiplier along a consumption
function that is increasing at a decreasing rate?
If the consumption function is increasing at a decreasing rate that implies that the
slope is getting flatter or that the marginal propensity to consume is becoming
smaller. A smaller marginal propensity to consume is equivalent to a larger
marginal propensity to save. This should lead to a smaller multiplier as we move
along a consumption function.
Diff: 3 Skill: Analytic Topic: multiplier
AACSB: Analytic Skills

54. Suppose that an economy is operating at equilibrium and for some reason households
begin to save a smaller fraction of their income (the marginal propensity to save falls).
How will this affect equilibrium output in the future when planned investment rises and
falls?
A lower marginal propensity to save implies a much larger multiplier. If this
happens we can expect that changes in planned investment will have a much
greater impact on aggregate output.
Diff: 2 Skill: Conceptual Topic: MPS and multiplier
AACSB:
55. Assume that at every level of output households reduce their level of saving by the
same absolute amount. Explain what impact if any this will have on the value of the
multiplier.
It will have no impact on the multiplier whatsoever for the simply reason that the
slope of the saving function has remain unchanged. That is, the marginal
propensity to save is still the same. Since the multiplier is equal to the inverse of
the marginal propensity to save we can safely conclude that the multiplier is
unchanged.
AACSB:
56. Explain why the multiplier that is calculated in the textbook and the size of the
multiplier in the real world are likely to be different. What are the two reasons?
First the text assumed that planned investment is fixed and does not respond to
changes in the economy. Second, it ignores the role of government, financial
markets and the rest of the world.
AACSB
57. Algebraically derive the value of the multiplier assuming the basic form of the
consumption function as C = a + bY where "a" is consumption where income is zero

and "b" is the marginal propensity to consume. You may assume a two-sector private
economy.
Since Y = C + I we can write Y = a + bY + I.
This equation can be rearranged to yield
Y - bY = a + I
Y(1-b) = a + I
We can then solve for Y in terms of I by dividing through by (1 - b):
Y = (a + I) [1/(1 - b)]
Now we can see that an increase in I will increase Y by
Y = I x [1/(1 - b)]
Since b  MPC, the expression becomes
Y = I x 1/(1 - MPC)
Therefore, the multiplier is 1/(1 – MPC) or 1/MPS.
AACSB:
58. Explain what is meant by the multiplier and explain what variable (s) determines its
size.
The multiplier represents the effects of a given change in autonomous
expenditures on equilibrium output. The variable/parameter that determines its
size is the marginal propensity to consume (or marginal propensity to save). More
generally, the slope of the AE line determines the size of the multiplier. As planned
aggregate expenditures become more income sensitive, any change in autonomous
expenditures will cause a larger change in equilibrium output.
AACSB:
59. Explain what effect an increase in the marginal propensity to save will have on the
slope of the planned aggregate expenditures line and on the size of the multiplier.
An increase in the MPS also represents a reduction in the marginal propensity to
consume. When the MPC falls, a given change in income now will have a smaller
effect on consumption. So, when output rises, there will be a smaller increase in
planned aggregate expenditures. This indicates that the slope of the AE line will
decrease. This increase in the MPS will also cause a reduction in the size of the
multiplier. When autonomous expenditures rise, firms will increase production
and income will rise. Now, we will observe a smaller increase in expenditures as Y
rises because of the larger MPS. This causes the final effect on output to be smaller
and, therefore, causes the size of the multiplier to be smaller as well.
Diff: 3 Skill: Analytic Topic: MPC and aggregate expenditure
AACSB: Analytic Skills

60. Discuss some of the factors that would cause the actual multiplier to be different from
1/(1 - MPC).
In this model, we have not taken into account income taxes. An income tax rate
will affect the size of the multiplier (makes it smaller). We have also not taken into
account the effect of interest rates on the economy. Once interest rates are
included, the size of the multiplier will be further reduced. And finally, we have
assumed that the aggregate price level is fixed. Allowing for the aggregate price
level to change will reduce the multiplier.
Diff: 2 Skill: Conceptual Topic: actual multiplier
AACSB:

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Test Bank for Principles of Macroeconomics 11th

Edition Case Fair Oster 0133023672

1. Define aggregate output.

3. List four determinants of aggregate consumption.

and the slope. Make sure to label both axes.

Diff: 1 Skill: Analytic Topic: consumption function

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

Aggregate saving is simply aggregate income less aggregate consumption.

14. Explain what the aggregate consumption function is.

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

Diff: 1 Skill: Analytic Topic: consumption function

The equation for the consumption function is C = 200 + .75Y

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

The consumption function is C = 200 + .8Y Therefore if C = Y we can write Y = 200

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

THE DETERMINATion OF Equilibrium Output (Income)

29. Define the significance of equilibrium in the macroeconomics goods market.

Diff: 2 Skill: Analytic Topic: equilibrium output

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

Diff: 2 Skill: Analytic Topic: equilibrium income

Copyright © 2014 Pearson Education, Inc.

Aggregate Aggregate Planned Planned Unplanned

Aggregate Aggregat Plann Planne Unplan

Diff: 2 Skill: Analytic Topic: equilibrium output

Copyright © 2014 Pearson Education, Inc.

44. Define an exogenous variable.

Copyright © 2014 Pearson Education, Inc.

47. Define the multiplier.

Copyright © 2014 Pearson Education, Inc.

50. Why doesn't the multiplier process go on forever?

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

Copyright © 2014 Pearson Education, Inc.

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