Multipliers (Investment, Government Spending, Tax)

Concepts

Marginal Propensity to Consume (MPC)
Marginal Propensity to Save (MPS)
Government Spending Multiplier
Investment Multiplier
Tax Multiplier
Lump-Sum Tax vs. Per-Unit Tax
Gov’t Spending Multiplier vs. Tax Multipler
Crowding Out Effect (Basic Intro)

Overview

The multiplier is a very important part of Keynesian economics. It illustrates the power of spending in our economy through the multiple stages of economic activity it creates. There are 3 types of multipliers we learn about in this lesson: Government Spending Multiplier, Investment Multiplier, and the Tax Multiplier. We will learn how to calculate each multiplier and apply them when appropriate. We will also look at the relative strength of a spending multiplier vs. a tax multiplier and how the government uses this concept to make decisions in terms of how much to spend and how much to tax.

Materials

Lecture

Video Coming at Later Date

Quiz

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