Multiplier can be described as

JAMB Economics 2023 287 views
Source: JAMB · 2023

Multiplier can be described as

  1. the ratio of change in an endogenous variable to the change spending
  2. the ratio of change in output to a change in autonomous spending ✓
  3. the ratio of variables that multiplies autonomous spending plus tax
  4. the ratio of variables that multiplies autonomous spending
Explanation

The multiplier shows how much national output changes when autonomous spending changes. It is the ratio of change in output to a change in autonomous spending.

For example, if N1 billion of new investment raises output by N4 billion, the multiplier is 4.

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