The travel multiplier measures the effect of the initial tourism spending and the chain of spending that follows.
If the full multiplier for G (i.e. ignoring crowding out effects) is = change in G/Multiplier Then the tax multiplier is = change in T x marginal propensity to consume/multiplier since the mpc is between 0 and 1 the tax multiplier is less. Intuitively it is not difficult to see why, the change tax enters spending decisions through consumption and consumption is dependant on the mpc. Whereas as G affects spending decisions directly - it is a injection into the economy that does not have to work through some indirect source to have an effect on the economy.
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The multiplier. The multiplicand is multiplied by the multiplier to create the product.
For a change of p percent, the multiplier is (1+p/100).
The multiplier effect, is when one job in the mining industry creates 4 new jobs in other industries
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The travel multiplier measures the effect of the initial tourism spending and the chain of spending that follows.
The multiplier effect describes how an increase in some economic activity starts a chain reaction that generates more activity than the original increase. The multiplier effect demonstrates the impact that reserve requirements set by the Federal Reserve have on the U.S. money supply.
Multiplier Effect
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by dividing investment with 1 subtract consumption function
The Multiplier Effect
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K= I/(1-MPC) MPC is a marginal propensity to consume I = investment
tree multiplier CSA (carry select adder) multiplier shift & add multiplier Higher radix multiplier
If the full multiplier for G (i.e. ignoring crowding out effects) is = change in G/Multiplier Then the tax multiplier is = change in T x marginal propensity to consume/multiplier since the mpc is between 0 and 1 the tax multiplier is less. Intuitively it is not difficult to see why, the change tax enters spending decisions through consumption and consumption is dependant on the mpc. Whereas as G affects spending decisions directly - it is a injection into the economy that does not have to work through some indirect source to have an effect on the economy.