Multiplier Flashcards
1
Q
what is the multiplier
A
the ratio of the final change in national income to the initial change in the injection
2
Q
what are the formal calculations for the value of the multiplier
A
1/MPW or 1/1-MPC
3
Q
what is a positive multiplier
A
when an initial increase in injections(or decrease in leakages)leads to a greater final increase in GDP
4
Q
what is a negative multiplier
A
when an initial decrease in injections( or an increase in leakages) leads to a greater final decrease in GDP
