Toggle navigation
Home
Ask A Question
Answer Questions
Users
Support/FAQ
Login
Register
Preview 50% of the Answer Below
Due to formatting, images, tables, or paragraphs may be out of place or not shown. Rest assured that they will be included and formatted correctly in your purchased answer.
Details
Question Title:
Simple Spending Multiplier
Go Back to the Question
Answer Preview
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 Neue, XXXXXXXXX, Arial, sans-serif; font-XXXX: XXXX; XXXX-XXXXXX: XXXX;" /><span style="font-family: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, XXXX-serif; font-XXXX: XXXX; line-XXXXXX: 16px;">The more complex "how-to" XXXXXXXX a XXX XX XXXXX... XXXXXXXXXXXX, XXX XXXXXXXXX mathematical relation:</span><br style="font-family: XXXXXXXXX Neue, Helvetica, XXXXX, XXXX-serif; font-size: 13px; line-height: 16px;" /><XX style="font-XXXXXX: XXXXXXXXX Neue, Helvetica, XXXXX, sans-XXXXX; font-size: XXXX; XXXX-XXXXXX: 16px;" /><span style="font-XXXXXX: Helvetica Neue, Helvetica, Arial, XXXX-serif; XXXX-XXXX: XXXX; XXXX-XXXXXX: 16px;">Y = XX + XX (X – X) + I + X</span><br style="font-family: Helvetica Neue, Helvetica, XXXXX, XXXX-XXXXX; font-XXXX: XXXX; XXXX-XXXXXX: XXXX;" /><br style="XXXX-family: Helvetica XXXX, XXXXXXXXX, Arial, sans-XXXXX; font-XXXX: XXXX; line-height: 16px;" /><span style="XXXX-XXXXXX: Helvetica XXXX, XXXXXXXXX, XXXXX, XXXX-serif; XXXX-size: 13px; line-height: 16px;">Where X XXXXXXXXXX XXXXXX, XX XXXXXXXXXX exogenous (autonomous) consumption, XX represents the XXXXXXXX XXXXXXXXXX to consume, T represents XXXXXXXX, I represents investment, G XXXXXXXXXX government XXXXXXXXX. Assume a closed XXXXXXX, so there are XX exports or XXXXXXX.</span><XX style="XXXX-family: XXXXXXXXX Neue, Helvetica, XXXXX, XXXX-XXXXX; font-XXXX: XXXX; XXXX-XXXXXX: 16px;" /><XX style="XXXX-XXXXXX: XXXXXXXXX XXXX, Helvetica, XXXXX, XXXX-serif; XXXX-XXXX: XXXX; line-XXXXXX: XXXX;" /><span style="font-family: XXXXXXXXX Neue, Helvetica, Arial, sans-serif; XXXX-size: 13px; XXXX-XXXXXX: XXXX;">XXXXXXX XX rearranging the XXXXX relation:</span><XX style="XXXX-XXXXXX: XXXXXXXXX Neue, XXXXXXXXX, Arial, XXXX-serif; font-size: 13px; XXXX-XXXXXX: 16px;" /><br style="XXXX-XXXXXX: XXXXXXXXX Neue, XXXXXXXXX, XXXXX, sans-XXXXX; font-size: 13px; line-XXXXXX: XXXX;" /><span style="XXXX-family: XXXXXXXXX Neue, Helvetica, Arial, XXXX-XXXXX; font-size: 13px; line-height: XXXX;">Y = c0 + c1 (X &XXXXX; X) + I + X</span><XX style="font-XXXXXX: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, XXXX-serif; XXXX-size: XXXX; line-XXXXXX: XXXX;" /><span style="font-family: Helvetica XXXX, XXXXXXXXX, Arial, sans-serif; font-size: 13px; line-XXXXXX: XXXX;">X = c0 + c1Y – XXX + I + X</span><br style="XXXX-XXXXXX: Helvetica XXXX, XXXXXXXXX, XXXXX, sans-XXXXX; font-size: 13px; XXXX-XXXXXX: XXXX;" /><span style="XXXX-family: XXXXXXXXX Neue, XXXXXXXXX, Arial, XXXX-XXXXX; XXXX-size: 13px; XXXX-height: 16px;">Y &XXXXX; XXX = c0 – c1T + I + G</span><br style="XXXX-XXXXXX: Helvetica XXXX, Helvetica, Arial, XXXX-serif; XXXX-XXXX: XXXX; XXXX-XXXXXX: XXXX;" /><span style="font-family: Helvetica XXXX, XXXXXXXXX, Arial, sans-XXXXX; font-XXXX: 13px; XXXX-XXXXXX: XXXX;">(X – c1) Y = XX &XXXXX; XXX + I + X</span><XX style="XXXX-XXXXXX: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, XXXX-serif; XXXX-size: 13px; XXXX-XXXXXX: 16px;" /><span style="font-XXXXXX: XXXXXXXXX XXXX, XXXXXXXXX, XXXXX, XXXX-serif; font-XXXX: 13px; line-height: 16px;">X = X/(1 – XX) [XX &XXXXX; XXX + I +G]</span><XX style="XXXX-XXXXXX: Helvetica Neue, XXXXXXXXX, XXXXX, XXXX-serif; font-size: 13px; XXXX-height: XXXX;" /><br style="font-family: Helvetica XXXX, XXXXXXXXX, XXXXX, XXXX-serif; font-XXXX: 13px; line-XXXXXX: 16px;" /><span style="XXXX-family: Helvetica XXXX, Helvetica, Arial, sans-XXXXX; font-XXXX: 13px; XXXX-height: 16px;">XXXXXX whats XXXXXXX the bracket: XXX XXX XXXX expression as the income-XXXXXXXXXXX XXXXXXXXXX I gave near the XXXXX of XXXX XXXXXX. XX you increase c0, I or X by one unit, you XXXX see a 1/(1 &XXXXX; XX) XXXX XXXXXXXX in output. This is a XXXXXXXXXX mathematical distillation of the XXXXXXXXX XXXXXX the XXXXXXXXXX (XXXXXX, that XXXXXXX XXXXXXXXX in XXXXXX will lead to further XXXXXXX changes in XXXXXX).</span></p> <p></p>">
