Multiplier: Difference between revisions
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The multiplier is defined as 1/(1-MPC), where MPC = Marginal Propensity to Consume. | The multiplier is defined as 1/(1-MPC), where MPC = Marginal Propensity to Consume. | ||
Hence the higher the MPC, the greater the increase in aggregate income as a result of the injection. | Hence the higher the MPC, the greater the increase in aggregate income as a result of the injection. | ||
== See also == | == See also == | ||
* [[Marginal propensity to consume]] | * [[Marginal propensity to consume]] | ||
* [[Marginal propensity to save]] | * [[Marginal propensity to save]] | ||
[[Category:The_business_context]] | |||
Latest revision as of 01:23, 15 May 2020
An economic concept which states that an injection into the economy will increase the equilibrium level of national income by more than the amount of the injection.
The multiplier is defined as 1/(1-MPC), where MPC = Marginal Propensity to Consume.
Hence the higher the MPC, the greater the increase in aggregate income as a result of the injection.
