Explain how increases in C, I, or G, or decreases in T cause output to increase by more than the initial increase in AE ?
1
Expert's answer
2017-06-18T04:13:10-0400
A multiplied effect of increase in C, I, or G, or decreases in T on total output takes place because consumption depends on total income (or total output). When the last one increases in response to mentioned changes in C, I, T and G, consumption also enlarges and income rises further. This chain effect is infinite and depends on MPC - marginal propensity to consume. These multipliers are derived as infinite geometric series: ∆Y/∆G = ∆Y/∆I = 1/ (1 - MPC) ∆Y/∆T = -MPC/ (1 - MPC). ∆Y/∆C = 1/MPC
Finding a professional expert in "partial differential equations" in the advanced level is difficult.
You can find this expert in "Assignmentexpert.com" with confidence.
Exceptional experts! I appreciate your help. God bless you!
Comments
Leave a comment