7. Multiplier effect and accelerator

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4 Terms

1

What is the multipleir effect?

Changes in components of AD will lead to an even greater change in national output

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2

What is the accelerator effect?

Change in gdp causes same change in investment causing same change in GDP, causing loop

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3

What is the multipler effect equation?

1

—-——-

1-MPC

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4

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