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Topic: Multiplier (economics)

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  Multiplier (economics) - Wikipedia, the free encyclopedia
It is particularly associated with Keynesian economics; some other schools of economic thought reject or downplay the importance of multiplier effects, particularly in the long run.
The basic assumption of the multiplier effect is that the economy starts off with unused resources, for example, that many workers are cyclically unemployed and much of industrial capacity is sitting idle or incompletely utilized.
For various laissez-faire schools of economics which embrace Say's Law and deny the possibility of Keynesian inefficiency and under-employment of resources, therefore, the multiplier concept is irrelevant or wrong-headed.
en.wikipedia.org /wiki/Multiplier_(economics)   (779 words)

 Multiplier - Wikipedia, the free encyclopedia
Force multiplier, a factor that dramatically increases the combat-effectiveness of a given military force.
Lagrange multiplier, a scalar variable used in mathematics to solve an optimisation problem for a given constraint.
Fourier multiplier, an operator that multiplies the Fourier coefficients of a function by a specified function (known as the symbol).
en.wikipedia.org /wiki/Multiplier   (195 words)

 Input-Output Economics   (Site not responding. Last check: 2007-10-22)
The type II multiplier is used when the change in the number of employees who will be employed or laid off is known and the (direct, indirect and induced) change in the regionwide employment is desired.
The type II multiplier is used for a closed model when the initial change in sector income is known and the total change in regionwide income (all sectors combined) is desired.
A sector with the largest multiplier in the state may be so small that it takes an unrealistic rate of growth to generate the same region-wide growth of income as a very large sector with a very small multiplier.
www.fatemi.com /CONFERENCES/input.html   (6721 words)

 History of Economics Society 1999 Meeting, Abstracts   (Site not responding. Last check: 2007-10-22)
In economics, the theoretical problem of taste changing is a paradoxical one since the fundamental concept of rationality tends to be reduced by economists to consistency, a concept which explicitly excludes taste changing.
The evolution of economic ideas is driven by several forces, including the internal logic of the ideas themselves, the events of the world that economic analysis is said to describe, and sociological forces at work within the profession.
Religious economic thought has had to keep pace and respond to the transformation of economic life by shifting its conception of the social life from one rooted in an organic hierarchy to one that is steeped in rights language.
www.eh.net /HE/HisEcSoc/carchive/HES99_abstracts.shtml   (19180 words)

 Keynesian Economics, by Alan S. Blinder: The Concise Encyclopedia of Economics: Library of Economics and Liberty
Keynesian economics is a theory of total spending in the economy (called aggregate demand) and of its effects on output and inflation.
The main reason appears to be that Keynesian economics was better able to explain the economic events of the seventies and eighties than its principal intellectual competitor, new classical economics.
Keynesian economics may be theoretically untidy, but it certainly is a theory that predicts periods of persistent, involuntary unemployment.
www.econlib.org /library/Enc/KeynesianEconomics.html   (2440 words)

 Renshaw: Essay 1
The composite multiplier for an increase in government expendtiture is equal to 1.89.
My own preference when teaching international economics, however, is to start with an mpc equal to.5 and use an equation (2) type measure of disposable income to derive preliminary multipliers since it encourages one to explore the interconnection between large trade and government budget deficits.
Does an autonomous expenditure multiplier in the vicinity of 1.5 mean that Robert Lucas was correct in suggesting in 1982 that Keynesian economics is dead.
www.albany.edu /~renshaw/leading/ess01.html   (4902 words)

 Economics Interactive
Advanced industrialized countries tend to possess abundant economic capital, an educated populace that on average enjoys a relatively high standard of living, and to be technologically advanced, with well-developed markets for goods and resources.
The perspective of institutionalism is that economic behavior is shaped by the history, structures, patterns, norms and routines within specific organizational environments or populations.
Austrian economics is a school of economic thought that relies heavily on deductive logic instead of inductive reasoning.
www.unc.edu /depts/econ/byrns_web/Economicae/EconomicaeA.htm   (4002 words)

 Economics Interactive   (Site not responding. Last check: 2007-10-22)
The multiplier is a difficult concept for students to comprehend.
Just as the water pressure (and water flow) would be a reciprocal of the sum of the holes in the pipeline, the multipliers (and income flow) are likewise a reciprocal of the sum of the leakages form the spending stream.
While mathematical presentations on the multiplier tend to silence a class, the "poking a pipeline" analogy seems to create a spark, probably with a more lasting and clearer impression of the multiplier universe.
www.unc.edu /~rbyrns/PrinEcon/GI_2004/07-MacTheory/GI-28.htm   (5009 words)

 The Impact of Humboldt State University on the Local Economy
Consequently the sum of direct, indirect and induced economic impacts of HSU on the County economy is $196.5 million.
The size of the economic base is an important determinant of size of the County’s population and economy.
Assuming that the spending multiplier for HSU employees was 0.12 (each dollar spent by an employee ultimately added an additional 12 cents to the county’s economy), then the $86.22 million payroll expenditures would result in an addition of $10.35 million to the local economy through the multiplier effect.
www.humboldt.edu /~indexhum/projects/impact.htm   (2004 words)

 ECONOMICS 2013   (Site not responding. Last check: 2007-10-22)
Notice that the multiplier effect can continue until every bit of the income injected into the economy (your $200 income tax refund) has leaked out of the economy in the form of saving.
Another factor that would reduce the multiplier is the fact that you, I, Jack, Paula, and other participants in the multiplier process may decide to spend some of the increase in income that we receive on imports.
Actually, the multiplier of the United States has been estimated to be around 2, so your receipt of the $200 income tax refund would be likely to result in a total increase in income of $400.
www.obu.edu /business/arye/macroonline/answerstothemultipliereffectatwork.htm   (384 words)

 Tutor2u - the multiplier
This is known as the multiplier effect and it comes about because injections of demand into the circular flow of income stimulate further rounds of spending.
If aggregate supply is inelastic, the full multiplier effect is unlikely to occur, because increases in AD will lead to higher prices rather than a full increase in real national output.
The multiplier might ignore foreign economic effects that are important for countries with a large foreign trade sector.
www.tutor2u.net /economics/content/topics/macroeconomy/multiplier.htm   (636 words)

 The Perseverance of Paul Samuelson
The multiplier, the propensity to consume, the paradox of thrift, countercyclical fiscal policy, and C + I + G were all incorporated into the language of Econ 101.
The torrential pace of economic activity in 1983-1984 was an expansion, fueled by demand-side growth, in the name of supply-side economics" (12:192).
Samuelson's desire to homogenize mainstream economics into one grand "neo-classical synthesis" is evident in his "family tree of economics." Beginning with the fourth edition (1958, flap), the author created a genealogical diagram of economic thought from the Greeks to the present.
www.mskousen.com /Books/Articles/perserverance.html   (5993 words)

 Renshaw: Essay 18
If this interpretation of the Keynesian multiplier model, and its policy implications, were essentially correct there would be very little change in the shifting propensity to spend out of the previous year's income in the vicinity of economic recessions.
Table 18.4 are not inconsistent with the hypothesis that the large budget deficits which followed the Economic Recovery Tax Act of 1981 may have helped to raise the inflation adjusted yield on new home mortgages dramatically and made housing and investment in new plant and equipment less affordable in the US.
The most notable difference between the great depression of the 1930s and the recessions of 1980 and 1981-82 is the extent to which an increase in the government deficit was able to offset the adverse effect of a decrease in investment spending.
www.albany.edu /~renshaw/leading/rec18.html   (3989 words)

 American Journal of Economics and Sociology, The: On the Mythology of the Keynesian Multiplier: Unmasking the Myth and ...
JAMES C. Keynes's multiplier story invites acceptance by building on the fact that people typically consume only a fraction of their income and that such purchases are incomes for sellers.
But the mythology of the multiplier story becomes clear when we ask, "From where do people find the means to purchase consumption goods, other than production?" The inadequacies of several earlier criticisms stem from their failure to focus on this fundamental point.
Recognition of the fundamental flaw in the Keynesian multiplier concept also should caution against attempts to estimate the impact effects of certain public expenditures, using "sectoral multipliers" based on the consumption expenditures of people employed in those industries, such as Kahane (1997).
www.findarticles.com /p/articles/mi_m0254/is_4_60/ai_80802015   (1289 words)

 Search Results for multiplier - Encyclopædia Britannica
in economics, numerical coefficient showing the effect of a change in total national investment on the amount of total national income.
The source of the high voltage for Cockcroft and Walton's pioneering experiments was a four-stage voltage multiplier assembled from four large rectifiers and high-voltage capacitors.
in economics, the proportion of total income or of an increase in income that consumers tend to spend on goods and services rather than to save.
www.britannica.com /search?query=multiplier&submit=Find&source=MWTAB   (422 words)

 Use the multiplier to explain how an increase in any component of aggregate demand will increase GDP. What are the ...
The bulky nature of building materials means that most will come from domestic producers and therefore the multiplier effect is likely to be larger than for spending on manufactured goods where many of the components are likely to be imported.
Investment may also increase with spending and the multiplier functions on the assumption that all investment is autonomous, however, as private companies receive more capital they are likely to invest again in the economy.
Time lags are also a problem because the various rounds of spending, which cause the multiplier effect, take time to build up; therefore the strength of the effect may not be seen for some time.
www.coursework.info /i/37682.html   (591 words)

 Multiplier (economics) - Hutchinson encyclopedia article about Multiplier (economics)   (Site not responding. Last check: 2007-10-22)
Process whereby one change sets in motion a sequence of events that results in decline or growth.
Multiplier effects are also important in new towns, where industry is needed to attract people and create further wealth.
This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.
encyclopedia.farlex.com /Multiplier+(economics)   (117 words)

 Economics 330
And what our equation tells us is that the money multiplier, m, is a function of the currency to checkable deposit ratio, the excess reserves to checkable deposit ratio, and the required reserve ratio.
Interpretation of the money multiplier:  for a given value of the money multiplier, an increase in the monetary base will lead to an increase in the money supply equal to the product of the money multiplier times the change in the monetary base.
What happens to the money multiplier if excess reserves equal $500 B? An increase in the excess reserve level reduces the size of the money multiplier:  there is an inverse relationship between the level of excess reserves and the money multiplier.
www.ssc.wisc.edu /~ekelly/econ330/economics330lecture11spring2002.htm   (1842 words)

 Mises Economics Blog: The Myth of the Magical Multiplier
The economic effect considered in isolation might not be different, but the sheer size of the investment of Social Security would lead to government control of business to a greater degree than is the case today.
Financial and economic forecasting require entrepreneurial judgment, and this skill can not be taught by theoretical economics or for that matter by any other formal discipline.
Anyway, the essay gave me an insight as to one possible reason, other than one's economic philosophy, why there is divergent opinions as to the macroscopic economic effect of savings: Ambiguity in the term "savings" itself in respect to the "storage time" involved.
blog.mises.org /blog/archives/003978.asp   (4209 words)

 McGraw Hill - McConnell Brue ECONOMICS   (Site not responding. Last check: 2007-10-22)
The multiplier effect is the magnified increase in equilibrium GDP that occurs when any component of aggregate expenditures changes.
MPC = 1; multiplier = infinity; MPC =.9, multiplier = 10; MPC =.67; multiplier = 3; MPC =.5, multiplier = 2; MPC = 0, multiplier = 1.
The complex multiplier also takes account of leakages of taxes and imports, making the complex multiplier less than the simple multiplier.
www.mhhe.com /economics/mcconnell/student1/akq/key10.mhtml   (932 words)

 ECONOMICS 2013   (Site not responding. Last check: 2007-10-22)
To find the ultimate increase in income, we take the initial increase ($25,000) and multiply times the multiplier (5); the result is $125,000.
The reason is due to the fact that the multiplier process can continue to work until every bit of the $25,000 injected into the economy through your buying of the car leaks out of the economy in the form of saving.
In other words, the multiplier process continues until every bit of the money initially injected into the economy leaks out of the spending stream in the form of saving.
www.obu.edu /business/arye/macroonline/answerstoMeEconomicallyImportantandOhNoaGap.htm   (1065 words)

 Economics - The Multiplier Effect Of Money Within The Commonwealth’s Economy
“multiplier effect.” The multiplier operates on the principle that one
the multiplier effect of monetary flows is not as pronounced as in the case
The higher the MPC means the larger the multiplier.
www.cnmi-guide.com /info/essays/economics/33.html   (757 words)

 Keynesian Economics and Fiscal Policy
The multiplier is greater than 1 because an initial increase in demand leads to an increase in income which, in turn, leads to an increase in demand, (see Table 10.2(25.2))
This implied the effect of a proposed cut in G of $20 billion would be to lower GDP by $30 billion and reduce the growth rate of GDP from 3% to 2.5%.
a) Walter Heller was a strong advocate of Keynesian economics and was appointed the chairman of the President’s Council of Economic Advisors.
www.timelyknowledge.com /keynesian_economics_and_fiscal_policy.htm   (1874 words)

 [No title]
If "the" multiplier is 5 and income increased by $65 billion, the increase in autonomous spending must have been a) $11 billion b) $13 billion c) $325 billion d) $0.077 billion 4.
Fiscal versus Monetary Policy multiplier magnitudes increasing G vs decreasing taxes policy vs expenditure lags discrimination monetarist view of fiscal policy 2.
Suppose an economy is at its long-run average rate of unemployment, and has a nominal growth rate of 5%, a budget deficit of $30 billion, a money multiplier of 4, a publicly-held national debt of $400 billion and a money supply of $200 billion.
www.msu.edu /course/ec/202/amsler/KENNEDY.PPT   (2270 words)

 Economics 104 Exam I, Review Sheet
The study of economics is a social science focused on the allocation of scarce resources.
Show/describe how inflation reduces the size of the multiplier in the context of the ag supply/ag demand analysis.
Note that income taxes reduce the size of the multiplier, but don't worry about exactly how.
mason.gmu.edu /~cmeyer/REVIEWs.html   (822 words)

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.
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 multiplier itself is an attempt to measure the size of those "carry-through effects".
www.investopedia.com /terms/m/multiplier.asp   (224 words)

 Multimedia Economics Education
Think of them as "virtual office hours" or "electronic notes." The hope is that multimedia and interactivity will engage the student in a more intensive way than the simple lecture, or than reading the textbook.
The way that the standard graphs and figures of economics are presented in lectures is inherently dynamic.
New curves are derived from old ones; curves shift as people's behavior changes; the point on the graph representing the position of the economy changes as shocks push the economy away from and as equilibrium-restoring processes push the economy back to equilibrium.
econ161.berkeley.edu /multimedia/Multimedia.html   (328 words)

 The Short Run
This is the page for help in any class you might be taking in economics, or if you just want to brush up on your theory, terminology, economists, or schools of thought.
The goal of these tutorials is to provide students of economics with detailed summaries of issues they are likely to address in classes at the undergraduate or graduate level.
This is a great, quick economics guide for both students and economists.
www.theshortrun.com /classroom/classroom.html   (215 words)

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