Multiplier

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Revision as of 08:18, 22 August 2013 by imported>Doug Williamson (Spacing 22/8/13)
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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.


See also