Principles of Macroeconomics / Unit 9 MAC 0824 short lesson, about 20 seconds
The Multiplier, Round by Round
Captions available
The idea
An initial change in spending circulates. Households buy from firms, firms pay workers and suppliers, who spend again. Each round is smaller, because some of every dollar leaks away. The rounds sum to more than the change.
In practice
The rounds become negligible after roughly ten passes.
Where people slip
The total is finite. An endless shrinking series adds to a definite number.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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