The Multiplier

Question 1

what is the multiplier effect

Answer 1

when an initial injection/withdrawal leads to a proportionately greater change in aggregate demand

Question 2

what is the positive multiplier

Answer 2

when an initial injection leads to a proportionally greater increase in AD

Question 3

what is the negative multiplier

Answer 3

when an initial leakage/withdrawal leads to a proportionally greater decrease in AD

Question 4

what is MPC

Answer 4

measures the proportion of extra income that is spent on consumption

Question 5

what is MPS

Answer 5

the proportion of any extra income that is saved by consumers

Question 6

what is MPT

Answer 6

the proportion of additional income that is taxed

Question 7

what is MPM

Answer 7

the proportion of additional income that is spent on imports

Question 8

what does MPC stand for

Answer 8

marginal propensity to consume

Question 9

what does MPS stand for

Answer 9

marginal propensity to save

Question 10

what does MPT stand for

Answer 10

marginal propensity to tax

Question 11

what does MPM stand for

Answer 11

marginal propensity to import

Question 12

what are the formula for the multipler

Answer 12

1/1-MPC
1/MPW