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In macroeconomics, a multiplier is a factor of proportionality that measures how much an endogenous variable changes in response to a change in some exogenous variable. For example, suppose variable x changes by k units, which causes another variable y to change by M × k units.
The accelerator effect is shown in the simple accelerator model. This model assumes that the stock of capital goods (K) is proportional to the level of production (Y): K = k×Y. This implies that if k (the capital-output ratio) is constant, an increase in Y requires an increase in K. That is, net investment, I n equals: I n = k×ΔY
The simplistic multiplier that is the reciprocal of the marginal propensity to save is a special case used for illustrative purposes only. The multiplier applies to any change in autonomous expenditure, in other words, an externally induced change in consumption, investment, government expenditure or net exports.
A diagram of the Ripple effect illustrating how the "Weinstein Scandal" led all the way to the rise of the Me Too movement.A ripple effect occurs when an initial disturbance to a system propagates outward to disturb an increasingly larger portion of the system, like ripples expanding across the water when an object is dropped into it.
An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical , framework designed to illustrate complex processes.
This model was developed by Paul Samuelson, who credited Alvin Hansen for the inspiration. [ 1 ] [ 2 ] [ 3 ] This model is based on the Keynesian multiplier , which is a consequence of assuming that consumption intentions depend on the level of economic activity, and the accelerator theory of investment , which assumes that investment ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Complexity economics draws inspiration from behavioral economics, Marxian economics, institutional economics/evolutionary economics, Austrian economics and the work of Adam Smith. [18] It also draws inspiration from other fields, such as statistical mechanics in physics, and evolutionary biology .