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Unformatted text preview: Expenditure Multiplier = 1
1−mpc > 1, the expenditure multiplier = a + mpc × (Y − T ) + I + G + NX
mpc × T
a + I + G + NX
1 − mpc
1 − mpc = C + I + G + NX ISLM Model An increase in net exports leads to an even larger increase in
∆NX ⇔Y ⇔Y Y Now suppose there is international trade, i.e. NX = 0 Role of International Trade Aggregate Output ...
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- Fall '08