multiplier Flashcards
1
Q
what is the multiplier effect
A
occurs when an initial injection into the circular flow causes a bigger final increase in real national income.
2
Q
what is the ratio of final change (multiplier effect)
A
the ratio of the final change in the income to change in the injection is the value of the multiplier
3
Q
what is the equation for the value of the multiplier
A
value of the multiplier=change in national income/change in injection
4
Q
what is discretional fiscal policy
A
are intentional government policies to increase or decrease government spending or taxation
5
Q
what is cyclical fiscal policy
A
measure with counteract the effects of the economic cycle
