Social Sciences and History / Unit 15 SSH 1417 short lesson, about 20 seconds
The Expenditure Multiplier
Captions available
The idea
Keynesians hold that an expenditure multiplier exists: a change in autonomous spending causes a more than proportionate change in real GDP, since spending becomes income and is spent again. So a purchase or tax cut moves AD by more than itself.
In practice
The witness's marginal propensity to consume sets its size.
Where people slip
The anchor states the idea, not the arithmetic.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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