Whats a mathematical expression of a simple keynesian

Reference no: EM133336897

Question: Whats a mathematical expression of a simple Keynesian multiplier and define all the terms. Give an example to illustrate its significance.

KEY:

A simple multiplier expression:

Y = [1/(1-b)] * G or ΔY = [1/(1-b)] * ΔG

Where, b = marginal propensity to consume, Y = real GDP, G = government expenditure, 1/(1-b) =

multiplier ratio

Note: In the formula above, the symbol * stands for the multiplication symbol Example to illustrate the significance of the multiplier: any valid example is okay

Reference no: EM133336897

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