Comments on: The Multiplier Effect http://www.economicshelp.org/blog/economics/the-multiplier-effect/ Economics Blog - current events and economics essays Thu, 18 Mar 2010 19:46:30 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: tejvan http://www.economicshelp.org/blog/economics/the-multiplier-effect/comment-page-1/#comment-4831 tejvan Mon, 02 Nov 2009 11:56:22 +0000 http://www.economicshelp.org/blog/?p=1948#comment-4831 M (imports) will rise as C (consumption) rises. Typically M may account for say 0.4 of any rise in C. So if you get an extra £10, £4 goes on imports, £3 on taxes leaving an increase in C of £3. M (imports) will rise as C (consumption) rises. Typically M may account for say 0.4 of any rise in C.

So if you get an extra £10, £4 goes on imports, £3 on taxes leaving an increase in C of £3.

]]> By: Andrew http://www.economicshelp.org/blog/economics/the-multiplier-effect/comment-page-1/#comment-4829 Andrew Mon, 02 Nov 2009 10:25:16 +0000 http://www.economicshelp.org/blog/?p=1948#comment-4829 Thanks for that - clears up some questions. You raise that M should increase as well - in representing the effect of the multiplier, I'm thinking that C and I should increase by enough to cancel out the increase in M, whilst maintaining the correct ratio of each propensity (to consume, to invest, to import)? Hope that makes sense. Thanks for that – clears up some questions. You raise that M should increase as well – in representing the effect of the multiplier, I’m thinking that C and I should increase by enough to cancel out the increase in M, whilst maintaining the correct ratio of each propensity (to consume, to invest, to import)? Hope that makes sense.

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