Multiplier Model and Keynesian Cross Flashcards
1
Q
What is the Multiplier Model?
A
The multiplier model is a way to measure how something like increasing investment affects the entire economy
2
Q
What is the multiplier model simple formula?
A
C = Co + C1y
Where C = Consumption
Co = Fixed Expenditure
C1y = A fraction of any extra money they make that they decide to spend on things
