The Keynesian multiplier
Change the MPC and the size of an injection to see the multiplier and the final rise in income.
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Questions students ask
Why is the real multiplier smaller?
Some extra income leaks away in taxes, imports and saving at each round, so k = 1/(MPS + MPT + MPM).
What formula does it use?
k = 1/(1 − MPC); ΔY = k × ΔJ.
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