Chapter 10 and 13 REVIEW:
MULTIPLIER |
PAGE |
LARGER OR SMALLER THAN |
SIMPLE |
p. 200-203 "The Multiplier Effect" |
multiplier = 1 / MPS |
Complex multiplier |
p. 203-205 |
smaller because there are more leakages: (1) saving, (2) spending on imports, and (3) taxes; fiscal policy is less effective |
Multiplier w/ changes |
p. 205 "How Large is the Actual Multiplier Effect?" |
smaller than the simple multiplier; fiscal policy is less effective |
G spending multiplier |
p. 255 "Increased Government Spending" |
same as the simple multiplier assuming no inflation and no imports |
Tax multiplier |
p. 256 "Tax Reductions" |
one less than the simple multiplier, but negative |
Balanced Budget multiplier |
p. 256, 258 "Combined Gov/t Spending . . . " |
always equals 1, WHY?; less effective than the simple multiplier or the tax multiplier |
Multiplier w/ crowding out |
p. 265 "Crowding-Out Effect" |
smaller than the simple multiplier; fiscal policy is less effective |
Multiplier with supply-side effects |
pp. 367-370 "Taxation and Aggregate Supply" pp. 265-266 "Current Thinking on Fiscal Policy" |
larger than the simple multiplier; fiscal policy is more effective |