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Economics

Mechanism of multiplier

In this Class 12 Economics topic from “Determination of Income and Employment,” students learn how an initial change in autonomous investment or expenditure produces a multiplied change in national income. The topic explains successive rounds of income generation, the role of consumption, saving, marginal propensity to consume (MPC), and marginal propensity to save (MPS), and the relationship between them. Students also understand the investment multiplier, its formula, and how it helps explain equilibrium income and employment.

Medium · Level 1 · 1 questions

Practice questions

01What is the basic idea behind the government expenditure multiplier in the simple Keynesian model?

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