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The Multiplier Model

Chapter 24

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Main topics

Basic multiplier model

How it works

Derivation of multiplier

Role of fiscal polic

How !overnment affects output

"iscal multipliers

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Basic multiplier analsis

#utput determination with $ and %

#utput & total e'penditures

(d)ustment mechanism Derivation

The multiplier & ($*(D

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+ational #utput Determines the

,evels of Consumption and $avin!

Chapter 24

Figure 24-1

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The -.uili/rium ,evel of +ational #utput %s Determined /

%ntersection of $avin! and %nvestment $chedules

Chapter 24

Figure 24-2

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%n the Total -'penditure (pproach0 -.uili/rium 1D ,evel %s "ound at

the %ntersection of the C3 I TE$chedule with the 456 ,ine

Chapter 24

Figure 24-3

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-ach Dollar of %nvestment %s

7Multiplied8 into 9 Dollars of #utput

Chapter 24

Figure 24-4

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How the Multiplier Model "its

the AS*AD(pproach

Chapter 24

Figure 24-5

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Ta'es Reduce Disposa/le %ncome and

$hift CC$chedule to the Ri!ht and Down

Chapter 24

Figure 24-6

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Role of fiscal polic

1overnment fiscal polic & output

"iscal multipliers

1overnment e'penditure multiplier %mpact of ta'es

Balanced*/ud!et multiplier

$ome e'amples of fiscal polic

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1overnment urchases (dd #n :ust

like %nvestment to Determine

-.uili/rium 1D

Chapter 24

Figure 24-7

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The -ffect of Hi!her Gon

#utput

Chapter 24

Figure 24-8

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-'penditure Multipliers in

Macroeconomic Models

Chapter 24

Figure 24-9

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Chapter 24

Table 24-1

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Chapter 24

Table 24-2

C 24

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Chapter 24

Table 24-3