differences between the multiplier model and the AS/AD model
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What are the differences between the multiplier model and the AS/AD model?
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Differences between the multiplier model and the AS/AD model are explored.
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The multiplier was a concept developed by Keynes that states that any increase in injections into the economy (investment, government expenditure or exports) would lead to a proportionally bigger increase in National Income. This is because the extra spending would have knock-on effects creating in turn even greater spending. The size of the multiplier would depend on the level of leakages.
http://www.theshortrun.com/classroom/doctrines/multiplier.html
THE AS/AD model is an ...
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