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Keynesian economists often calculate multipliers that measure the effect on aggregate demand only. (To be precise, the usual Keynesian multiplier formulas measure how much the IS curve shifts left or right in response to an exogenous change in spending.)
In algebra, a number that is the multiplier of a variable or expression (e.g., the 3 in ) is called a coefficient. The result of a multiplication is called a product. When one factor is an integer, the product is a multiple of the other or of the product of the others.
The multiplier effect has been used as an argument for the efficacy of government spending or taxation relief to stimulate aggregate demand. In certain cases multiplier values less than one have been empirically measured (an example is sports stadiums), suggesting that certain types of government spending crowd out private investment or ...
The end result is a magnified, multiplied change in aggregate production initially triggered by the change in investment, but amplified by the change in consumption i.e. the initial investment multiplied by the consumption coefficient (Marginal Propensity to consume).
This is the central contents of the money multiplier theory, and + / / + / is the money multiplier, [1] [2] a multiplier being a factor that measures how much an endogenous variable (in this case, the money supply) changes in response to a change in some exogenous variable (in this case, the money base).
This implies that the Keynesian multiplier should be larger in response to permanent changes in income than it is in response to temporary changes in income (though the earliest Keynesian analyses ignored these subtleties). However, the distinction between permanent and temporary changes in income is often subtle in practice, and it is often ...
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In mathematics, a product is the result of multiplication, or an expression that identifies objects (numbers or variables) to be multiplied, called factors.For example, 21 is the product of 3 and 7 (the result of multiplication), and (+) is the product of and (+) (indicating that the two factors should be multiplied together).