What are the differences between the multiplier model and the AS/AD model?© BrainMass Inc. brainmass.com March 4, 2021, 5:54 pm ad1c9bdddf
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.
THE AS/AD model is an ...
Differences between the multiplier model and the AS/AD model are explored.