Multiplier
In Keynesian economic theory, a factor that quantifies the change in total income as compared to the injection of capital deposits or investments which originally fueled the growth. It is usually used as a measurement of the effects of government spending on income, and it can be calculated as one divided by the marginal propensity to save. Investopedia Says:
Keynesian economic theory contends, among other things, that any injection into the economy via investment capital, government spending or the like will result in a proportional increase in overall income at a national level. The basic premise of this theory is that increased spending will have carry-through effects which result in even greater aggregate spending over time. The multiplier itself is an attempt to measure the size of those "carry-through effects". Related Terms:
Economics
Gross Domestic Product - GDP
Keynesian Economics
Macroeconomics
Marginal Propensity To Consume - MPC
Monetarist Theory
Multiplier Effect |