2-Multiplier_Revision_Worksheet - IB Economics...

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IB Economics www.tutor2u.com Multiplier Revision Worksheet   (Higher Level Only) This concept relates directly to the   circular flow of income . The   national income  multiplier  considers how an increase in  injections  into the circular flow will change the  level of national income in the economy. To recap- Injections : Investment (I), Government Spending (G) and Exports (X) Withdrawals : Saving (S), Taxation(T) and Imports (M) If there is an  injection  into the circular flow the increase in national income will depend  upon the level of  withdrawals  in that economy. Marginal Propensity The   concept   of   marginal   propensity   considers   the   proportion   of   an   increase   in  consumer’s income that will be spent on the variable under consideration.  For example the marginal propensity to consume (mpc) measures the increase in personal  consumption following an increase in income. E.g if the mpc is 0.6 this implies that if the 
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This note was uploaded on 02/08/2012 for the course STA 2021 taught by Professor Xu during the Spring '11 term at FIU.

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2-Multiplier_Revision_Worksheet - IB Economics...

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