Questions tagged [multiplier]
The multiplier tag has no usage guidance.
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The marginal propensity to consume and the multiplier according to Keynes
In "The General Theory of Employment, Interest and Money", Chapter 10: The marginal propensity to consume and the multiplier, John Maynard Keynes says:
Our normal psychological law that, ...
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Why is the multiplicator effect considered stronger if money is handed out to poor people rather than the well off?
Frequently, extra handout to poor people during economic crisis is motivated by the multiplier effect. The reasoning goes something like this: since the recipients are poor they will consume the extra ...
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The case where the entire amount of investment goods are supplied by the imports
A positive investment multiplier does not exist in an open economy simple Keynesian
model when the entire amount of investment goods is supplied from import. Examine
the validity of this statement.
My ...
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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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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 ( \...
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