What is super multiplier?

Updated: 12/15/2022
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10y ago

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super multiplier refers to interaction of the multiplier and accelerator.

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Q: What is super multiplier?
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What are the practical differences between simple multiplier and super multiplier?

The simple multiplier implies that investment is the central determinant of output. The super multiplier combines the multiplier with the accelerator that indicates that investment is not autonomous, but is part of derived demand. Hence, the super multiplier indicates that capacity adjusted output is determined by autonomous demand. Autonomous demand in the case of the super multiplier would correspond to government spending, exports and some elements of consumption (particularly the wealthy whose consumption is not constrained by income). The practical difference is that not only demand determines output in the short run, but also in the long run. The economic system is effectively demand driven and Keynes' Principle of Effective Demand substitutes Say's Law.

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