Questions tagged [multiplier]
The multiplier tag has no usage guidance.
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questions
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Price rigidity and demand-constrained economies
In this note, http://web.mit.edu/krugman/www/MINIMAC.html, Krugman develops a simple model to introduce the idea that whenever an economy experiences price rigidity then this economy is demand-...
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Tax Reduction effect on agreggate demand
Im trying to figure out what initial and additional effects would a 20 thousand dollar tax reduction with a 3/4 marginal propensity to consume would have on the aggregate demand.
I first thought of ...
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45 views
Finding simple multiplier using G,Y,P,W
Let us say the estimated equation for the economy’s aggregate demand is
Y = 400 – 15P + 8G
And the estimated equation for the economy’s aggregate supply is
Y = 5 + 11P – 10W
where Y is the country’s ...
3
votes
2answers
122 views
setting of Lagrangian function
Consider a simple consumer's problem:
Max $u(X)$ s.t. $\sum_i^l p_i x_i\leq \sum_i^l p_i w_i$
$w$ is initial endowment.
We can set the Lagrangian function to solve this problem.
$L=u(X)+\lambda ( \...
