Question

it is important to remember when calculating the spending multiplier to determine government spending (in order to influencing the economy), the in the income-expenditure model is found at the point where the level of gdp/national income equals aggregate expenditure.

Answer 1

According to the multiplier effect idea, increases in private expenditure lead to an additional boost in economic activity from government spending.

Define Expenditure Multiplier.

The impact of a change in autonomous spending on total spending and aggregate demand is demonstrated by the expenditure multiplier.Divide the final change in real GDP by the change in autonomous spending to obtain the expenditure multiplier.

The income expenditure model was created by John Maynard Keynes as an economic theory to explain market fluctuations. The argument makes the claim that the economy only produces what can be sold on the open market and necessitates spending money on products and services.

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