Principles of Macroeconomics / Unit 9 MAC 0825 short lesson, about 20 seconds
The Multiplier Formula
Captions available
The idea
The multiplier is one divided by one minus the slope of the expenditure line. State it that way first, because the slope is visible and already contains every leakage.
In practice
With a slope of 0.6, the multiplier is one divided by 0.4, which is 2.5.
Where people slip
With no taxes and no imports the slope is the propensity to consume alone.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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