The multiplier effect

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  • Created on: 07-03-12 13:51
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The Multiplier
National Y increases more than investments
Figure used to multiply change in autonomous expenditure
Ratio of final change in Y to find initial change in autonomous expenditure
Leakages= decreases multiplier
Injections= increases the multiplier
Increases multiplier effect
Gov spending
Increase in national Y/ injection = multiplier effect
Gov & multiplier
Change spending to influence national Y and macro economic variables
Hard because measurements not always accurate
Not instantaneous time lags
Disagreements over size of multiplier


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