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Question Title:
Simple Spending Multiplier
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The simple "how-to" is as follows:</span><br style="font-family: Helvetica Neue, Helvetica, Arial, sans-serif; font-size: 13px; line-height: 16px;" /><br style="font-family: Helvetica Neue, Helvetica, Arial, sans-serif; font-size: 13px; line-height: 16px;" /><span style="font-family: Helvetica Neue, Helvetica, Arial, sans-serif; font-size: 13px; line-height: 16px;">Income-expenditure multiplier = 1/(1 – MPC)</span><br style="font-family: Helvetica Neue, Helvetica, Arial, sans-serif; font-size: 13px; line-height: 16px;" /><XX style="font-XXXXXX: Helvetica XXXX, Helvetica, XXXXX, sans-serif; font-size: XXXX; line-height: XXXX;" /><span style="font-family: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, sans-serif; XXXX-XXXX: 13px; XXXX-height: 16px;">XXX XXXX XXXXXXX "how-XX" XXXXXXXX a XXX of maths... specifically, the following XXXXXXXXXXXX XXXXXXXX:</span><XX style="font-family: XXXXXXXXX Neue, XXXXXXXXX, XXXXX, sans-XXXXX; font-XXXX: 13px; XXXX-height: XXXX;" /><br style="font-family: XXXXXXXXX XXXX, Helvetica, Arial, sans-XXXXX; font-XXXX: XXXX; line-XXXXXX: 16px;" /><span style="font-family: Helvetica XXXX, XXXXXXXXX, XXXXX, XXXX-XXXXX; XXXX-size: 13px; XXXX-height: XXXX;">Y = XX + XX (Y &XXXXX; X) + I + G</span><br style="font-XXXXXX: XXXXXXXXX XXXX, Helvetica, Arial, sans-XXXXX; font-XXXX: XXXX; XXXX-XXXXXX: XXXX;" /><XX style="XXXX-XXXXXX: Helvetica XXXX, XXXXXXXXX, Arial, sans-XXXXX; XXXX-size: XXXX; line-height: XXXX;" /><span style="XXXX-family: XXXXXXXXX XXXX, Helvetica, XXXXX, XXXX-serif; XXXX-size: 13px; line-height: 16px;">Where Y XXXXXXXXXX XXXXXX, XX represents exogenous (XXXXXXXXXX) XXXXXXXXXXX, c1 represents XXX marginal XXXXXXXXXX XX XXXXXXX, X XXXXXXXXXX taxation, I represents XXXXXXXXXX, X XXXXXXXXXX government XXXXXXXXX. Assume a XXXXXX economy, so there are XX exports or imports.</span><br style="font-XXXXXX: Helvetica XXXX, XXXXXXXXX, XXXXX, XXXX-XXXXX; XXXX-size: 13px; XXXX-XXXXXX: 16px;" /><br style="font-XXXXXX: XXXXXXXXX Neue, Helvetica, XXXXX, sans-serif; XXXX-XXXX: XXXX; line-height: 16px;" /><span style="XXXX-family: Helvetica Neue, Helvetica, Arial, sans-XXXXX; XXXX-XXXX: 13px; line-XXXXXX: XXXX;">Proceed XX XXXXXXXXXXX XXX above relation:</span><XX style="font-family: Helvetica Neue, XXXXXXXXX, XXXXX, XXXX-XXXXX; XXXX-XXXX: 13px; XXXX-XXXXXX: XXXX;" /><br style="XXXX-XXXXXX: Helvetica Neue, XXXXXXXXX, Arial, XXXX-serif; font-XXXX: XXXX; XXXX-XXXXXX: XXXX;" /><span style="XXXX-family: XXXXXXXXX XXXX, Helvetica, Arial, XXXX-serif; XXXX-XXXX: 13px; line-height: 16px;">Y = c0 + c1 (X &XXXXX; X) + I + X</span><br style="font-XXXXXX: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, XXXX-serif; font-XXXX: 13px; line-XXXXXX: XXXX;" /><span style="XXXX-family: Helvetica Neue, XXXXXXXXX, Arial, sans-serif; XXXX-XXXX: XXXX; XXXX-height: XXXX;">Y = c0 + c1Y – XXX + I + G</span><br style="font-family: Helvetica XXXX, Helvetica, Arial, sans-serif; XXXX-XXXX: 13px; XXXX-XXXXXX: XXXX;" /><span style="font-XXXXXX: Helvetica XXXX, XXXXXXXXX, Arial, XXXX-serif; font-XXXX: 13px; XXXX-height: 16px;">X &XXXXX; XXX = XX – c1T + I + X</span><br style="XXXX-XXXXXX: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, XXXX-serif; XXXX-XXXX: XXXX; line-height: XXXX;" /><span style="XXXX-family: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, XXXX-serif; XXXX-size: 13px; line-height: XXXX;">(1 – c1) Y = c0 – XXX + I + G</span><br style="font-XXXXXX: XXXXXXXXX XXXX, Helvetica, Arial, sans-XXXXX; font-size: 13px; line-height: 16px;" /><span style="font-family: Helvetica XXXX, Helvetica, XXXXX, XXXX-XXXXX; XXXX-XXXX: 13px; XXXX-height: 16px;">Y = 1/(1 &XXXXX; XX) [c0 &XXXXX; XXX + I +X]</span><XX style="XXXX-family: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, sans-serif; XXXX-size: XXXX; line-XXXXXX: 16px;" /><br style="XXXX-family: Helvetica XXXX, Helvetica, XXXXX, sans-XXXXX; XXXX-size: 13px; line-height: 16px;" /><span style="XXXX-family: Helvetica XXXX, XXXXXXXXX, Arial, sans-serif; font-XXXX: XXXX; XXXX-height: XXXX;">Notice whats XXXXXXX XXX bracket: its the same expression as the income-XXXXXXXXXXX multiplier I XXXX XXXX the XXXXX XX this answer. If you XXXXXXXX c0, I or G XX XXX XXXX, you will XXX a 1/(1 – c1) unit XXXXXXXX in XXXXXX. XXXX XX a convenient mathematical distillation XX the intuition behind XXX multiplier (namely, that XXXXXXX XXXXXXXXX in demand XXXX XXXX XX further XXXXXXX XXXXXXX in output).</span></p> <p></p>">
