Simple multiplier analysis (1 Viewer)

[jennelli28]

Government objectives! =)

Hey guys,
i was jus wonderin if anyone knew the answer to this question. "explain using the simple multiplier analysis how governments could solve a deficiency in demand" comeon anyone smart out there?! im desparate here! lol

 

[i-color]

deficiency in demand ---> govt budgets for a deficit (injections > leakages) and through the simple multiplier effect, this travels through the circular flow and is expounded by however many times the simple mulitplier is. This causes expansion of the circular flow, leading to greater production --> greater income --> higher demand to close deficiency in demand etc

 

[*Pooja*]

wow...cool...i never understand simple multiplier, too confusing...
WHAT THE HELL IS IT ?????? skool teacher says one thing, tuition teacher says another (totally unlinked to what skool teacher said)!

sum1 explain pls....

 

[jennelli28]

Hey thanks gal, ur a total lifesaver! =)

 

[iwantnotes&stuf]

1
_____
1-MPC i believe


basically - agg demand = M+Y+ blah
and in reality, when govt expenditure or investment, etc is put into the economy, it has a greater effect, than just the original dollar value.

im gonna stop trying to explain it =l
not really workin