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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.
Major topics include measurement of economic performance, national income and price determination, fiscal and monetary policy, and international economics and growth. AP Macroeconomics is frequently taught in conjunction with (and, in some cases, in the same year as) AP Microeconomics as part of a comprehensive AP Economics curriculum, although ...
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 ...
The concept of the multiplier was first developed by R. F. Kahn [93] in his article "The relation of home investment to unemployment" [94] in The Economic Journal of June 1931. The Kahn multiplier was the employment multiplier; Keynes took the idea from Kahn and formulated the investment multiplier. [95]
Trickle-up economics (also known as bubble-up economics) is an economic policy proposition that final demand among a broad population can stimulate national income in an economy. The trickle-up effect states that policies that directly benefit lower income individuals will boost the income of society as a whole, and thus those benefits will ...
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.
The multiplier–accelerator model can be stated for a closed economy as follows: [3] First, the market-clearing level of economic activity is defined as that at which production exactly matches the total of government spending intentions, households' consumption intentions and firms' investing intentions.
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.