Question

What do you know about multiplier?

Answer 1

Multiplier is a key concept in Keynesian economics that explains the relationship between investment and income, output, and employment. According to Keynes, the multiplier shows how a change in investment can cause a proportionally larger change in income. It is expressed as:

K = `(\DeltaY)/(\DeltaI)`;

where (ΔY) represents the change in income and (ΔI) represents the change in investment.