The Multiplier and Accelerator process Flashcards
(4 cards)
1
Q
What is the multiplier effect?
A
It states that any injection in the economy leads to a greater impact on the economy than the value of the initial injection
2
Q
What is the multiplier based on?
A
The idea that one individual’s spending is another individual’s income
3
Q
What does an increase in consumption do?
A
It immediately increases AD
4
Q
A
