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What is an expenditure multiplier model?

Anonymous

∙ 15y ago

Updated: 4/28/2022

The model tells you how much you need to multiply an initial autonomous change in AD (aggregate demand) to determine the total change in AD.

Wiki User

∙ 15y ago

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Q: What is an expenditure multiplier model?

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Related Questions

How can one determine the expenditure multiplier in an economic model?

To determine the expenditure multiplier in an economic model, you can use the formula: Expenditure Multiplier 1 / (1 - Marginal Propensity to Consume). The Marginal Propensity to Consume is the proportion of additional income that a person or household spends rather than saves. By calculating this ratio, you can understand how changes in spending affect overall economic activity.

According to the Multiplier Equation equilibrium income will be equal to the multiplier divided by autonomous expenditures?

Actually it is the change in the equilibrium expenditure divided by the change in autonomous expenditure. That will equal the expenditure multiplier.

What is the concept of Multiplier?

The concept of Multiplier highlights the effects of initial investment upon national income through changes in consumption expenditure.

The ratio of the change of the national income to the change in autonomous expenditure that brought it about- is known as?

the "Multiplier"

What is difference between Autonomous Expenditure and Induced Expenditure?

AUTONOMOUS AND INDUCEDEXPENDITURE :Autonomous expenditure is independent ofchanges in real GDP, whereas induced expenditurevaries as real GDP changes. In general, a change inautonomous expenditure creates a change in realGDP, which in turn creates a change in inducedexpenditure. The induced changes are at the heartof the multiplier effect.Induced expenditure is the sum of the componentsof aggregate expenditure that change withGDP.&diams; Autonomous expenditure is the sum of the componentsof aggregate expenditure that do notchange when real GDP changes.

How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?

How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?

What is Balanced budget multiplier?

BALANCED-BUDGET MULTIPLIER:A measure of the change in aggregate production caused by equal changes in government purchases and taxes. The balanced-budget multiplier is equal to one, meaning that the multiplier effect of a change in taxes offsets all but the initial production triggered by the change in government purchases. This multiplier is the combination of the expenditures multiplier, which measures the change in aggregate production caused by changes in an autonomous aggregate expenditure, and the tax multiplier which measures the change in aggregate production caused by changes in taxes.

What does investment affect in the keynesian model?

Government expenditure.

How can one determine the spending multiplier in an economic model?

To determine the spending multiplier in an economic model, you can use the formula: Spending Multiplier 1 / (1 - Marginal Propensity to Consume). The Marginal Propensity to Consume is the proportion of additional income that a person or household spends rather than saves. By calculating this value, you can find out how changes in spending will impact the overall economy.

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What is super multiplier?

super multiplier refers to interaction of the multiplier and accelerator.

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