Tag Archives: multiplier

3 Government expenditure Multiplier videos

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These three videos explain the process of affecting aggregate demand using government expenditure multiplier. If government expenditure is increased then how the total demand/output in the economy is affected? This is much similar to our previous blog post, the only difference being, it tackles the issue of government expenditure specifically.

This series of videos discusses following issues related to government expenditure

  • How an increase in government expenditure affects output?
  • How to calculate government expenditure multiplier? How can it be depicted graphically?
  • If an economy is placed at less than full employment level, then how government expenditure multiplier can be used to put an economy back to the full employment level?

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3 Aggregate demand and Multiplier fundas

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What is Aggregate demand? Aggregate demand is the sum total of demand by all sectors in an economy, namely, consumers, firms, government, foreigners. In these videos, we explain, how do depict aggregate demand graphically, where does the equilibrium in an economy lies? What is an autonomous part of aggregate demand?

If an economy is given a shock, in terms of either increase in government spending or an increase in autonomous investment or fall in taxes or an increase in money supply, then how does aggregate demand curve shifts?

Lastly, we discuss, why total increase in income is more than the initial shock (in terms of above discussed factors). This is explained by Multiplier process. What is multiplier? How is it derived? Hoe is the process of multiplier is depicted on a diagram? Continue reading →