Question.3737 - An important concept to explain the Keynesian model is the ‘spending multiplier’ effect. According to Keynes, an initial spending creates income in the economy and this new income leads to more spending and more income. As a result of this chain reaction, aggregate spending will increase more than the initial spending.To understand this concept better, please first read Humorist Art Buchwald's famous Multiplier Example in the materials on Canvas in Modules (Module 7.3), then construct your own example to explain the multiplier process. Your starting point can be a change (an increase or a decrease) in consumption expenditure, investment expenditure, government expenditure, or a change in exports. Be creative and come up with a fun scenario as in the Multiplier example by Art Buchwald. How would a change in C, I, G or X affect the economy? Would the effect on the economy be more, equal to or less than the initial change in spending?
Answer Below:
The xxxxxxxx multiplier xxxxxx shows xxx an xxxxxxx spending xxxxxxxx can xxxx to x much xxxxxx increase xx overall xxxxxxxx activity xxx example xxxx the xxxxx ice xxxxx parlor xxxxxxx in xxx equipment xx boosts xxx own xxxxxxxx and xxxxxxx a xxxxx reaction xxx parlor xxxxx new xxxxxxx who xxxx more xxxxx to xxxxx like xxxxx out xx dinner xx lunch xxxxxxxxxxx and xxxxxxxxx benefit xxxx this xxxxxxxxxxx which xxxxxxxxxx them xx expand xxxxx workforce xxx more xxxxxxxx and xx on xxx initial xxxxxxxxxx may xxxxxx across xxx community xx this xxxxx continues xxxxxxxxx about xx total xxxxxxxx activity xxxx illustrates xxx interconnections xx our xxxxxxx a xxxxx change xx expenditure xxx yield x substantial xxxxxx since xxxxx is xxxxxxxxxx flowing xxx creating xxx sources xx income xxx numerous xxxxxxxxxxx and xxxxx nbsp xxxxxxxxxxxxx building xxxxxx of xxxxxxxxx analysis xxxx The xxxxxxxx blocks xx Keynesian xxxxxxxx Khan xxxxxxx https xxx khanacademy xxx economics-finance-domain xxxxxxxxxxxxxx income-and-expenditure-topic xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx a xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx zwnj xxxxMore Articles From Economics
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