Question

1. Explain why many schools look like they make no profit on sports. In fact why is it consistently 0?

2. What is a multiplier? With respect to government spending, what is crowding out?

Answer 1

Ans1

As schools fail to have a better interaction between athletics and academic on campus. the graduation percentage of school athletes is very low as the school athletes who pass out fail to find a better job opportunities, restricting and unable them to earn a good money. Due to lack of effective policies in any economy restricting them to explore and exploit their capabilities.

Ans 2:

Multiplier refers to the value by which the economy's income changes dur to change in the investment. the rise in investment leads to rise in income of an economy ie. GDP by a given value of multiplier.The size of the multiplier depends upon MPC that is Marginal Propensity to consume or MPS that is Marginal Propensity to Save.It is given by formula, 1/(1-MPC) or 1/MPS.

with respect to government expenditure or spending crowding out is the phenomenon where rise in government expenditure reduces the private investment. the fiscal expansionary reduces the private investment spending called crowding out. as rise in government expenditure leads to rise in rate of consumption, rise in loanable funds, this rises savings in a economy and reduces private investments.