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# The multiplier

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### The multiplier

1. 1. The Multiplier
2. 2. A simplified circular flow of income model
3. 3. A simplified circular flow of income model Cd
4. 4. A simplified circular flow of income modelIncomes Cd
5. 5. A simplified circular flow of income modelIncomes Cd W=S+T+M
6. 6. A simplified circular flow of income model J=I+G+XIncomes Cd W=S+T+M
7. 7. The multiplierThe withdrawals and injections approach
8. 8. W, J The multiplier: (a) a shift in injections W a J1 O Ye1 Y
9. 9. W, J The multiplier: (a) a shift in injections W b J2 a J1 O Ye1 Ye2 Y
10. 10. W, J The multiplier: (a) a shift in injections Multiplier = ∆Y / ∆J = ∆Y / ∆W = c− a / b− c W b J2 J2 ∆J a ∆W J1 J1 c O Ye1 ∆Y Ye2 Y
11. 11. W, J The multiplier: (a) a shift in injections Multiplier = ∆Y / ∆J = ∆Y / ∆W = c− a / b− c = 1/mpw W b J2 J2 ∆J a ∆W J1 J1 c O Ye1 ∆Y Ye2 Y
12. 12. W, J The multiplier: (b) a shift in withdrawals W1 a J O Ye1 Y
13. 13. W, J The multiplier: (b) a shift in withdrawals W1 W2 a c J O Ye1 Ye2 Y
14. 14. W, J The multiplier: (b) a shift in withdrawals Multiplier = ∆Y / ∆W = c −a / a −b W1 W2 a c J ∆W b O Ye1 ∆Y Ye2 Y
15. 15. The multiplierThe income and expenditure approach
16. 16. E, W, J The multiplier: a shift in the expenditure curveY E1 O Ye1 Y
17. 17. E, W, J The multiplier: a shift in the expenditure curveY E 2 E1 O Ye1 Ye2 Y
18. 18. E, W, J The multiplier: a shift in the expenditure curveY E Multiplier = ∆Y / ∆ J 2 = c− a / b− a E1 c∆Y b ∆J a O Ye1 Ye2 Y
19. 19. The multiplierThe multiplier and AD / AS analysis
20. 20. Showing the multiplier effect on the 45o line and AD/AS diagrams Y Cd, W, J E1 O Y Y
21. 21. Showing the multiplier effect on the 45o line and AD/AS diagrams P AS AD1 O Y Y Cd, W, J E1 O Y Y
22. 22. Showing the multiplier effect on the 45o line and AD/AS diagrams P AS AD1 O Y Y E2 Cd, W, J E1 O Y Y Y
23. 23. Showing the multiplier effect on the 45o line and AD/AS diagrams P AS AD1 AD2 O Y Y E2 Cd, W, J E1 O Y Y Y