The simple multiplier is used to calculate how much an initial change in aggregate demand impacts on national income once it has been cycled through the circular flow of income. It is calculated by the formula k = 1/(1-MPC) or k=1/MPS
What is the Simple Multiplier?
Watch the video to introduce yourself to the this concept in HSC Economics:
Then watch the videos below to see how calculations of the simple multiplier (ΔY = k X ΔAD) are done:
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