Answer to Question #60000 in Microeconomics for peter

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. Calculate the size of the student spending multiplier

Answer 1

If students who attend Nottingham Technical University spend about £2,760 each in the local economy for a total of £50.45 million and, in total, the impact of their spending on the local economy is £63 million, then the size of the student spending multiplier is m = 63/50.45 = 1.25, so the impact on the local economy is 1.25 times higher than the amount of their spending.