The multiplier Flashcards by k n

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what is a positive multiplier?

initial increase in an injection leads to a greater final increase in real GDP

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What is a negative multiplier

initial decrease in an injection leads to a greater final decrease in real gdp

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what effects the multiplier process

the higher the propensity to consume domestically produced goods the greater the multiplier

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mpc formula

change in total consumption/change in gross income

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mps

change in total savings/change in gross income

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The multiplier Flashcards

(5 cards)