The Keynesian Expenditures Model and the Spending Multiplier

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Author:
Anonymous
ID:
208284
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The Keynesian Expenditures Model and the Spending Multiplier
Updated:
2013-03-19 13:32:04
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MacroEcon
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Study for test 2
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  1. How to compute MPC (Marginal Propensity to Consume)
    • Change in Consumption
    •    Change in Income
  2. Formula for Spending Multiplier
    •   1    
    • 1 - MPC
  3. How do you calculate change in GDP?
    (Change in autonomous spending) * (Spending Multiplier)
  4. Consumption Function
    C + MPC * Y
  5. What would cause a drop ion autonomous spending?
    A drop in consumer confidence
  6. What does the Keynesian notion of a multiplier effect suggest?
    Any change in spending can generate a much larger change in output and income

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