Multiplier Effect Flashcards by Ollie Gibb

Q

Multiplier effect

A

An initial change in aggregate demand can have a much greater final impact on the level of equilibrium national income

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Q

Multiplier formula

A

1/1-MPC
1/MPS
1/MPW

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Q

Multiplier with reference to circular flow

A

Widthdrawals increase multiplier decreases

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