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Closed economy agg expend - PowerPoint PPT Presentation

Multiplication, Net Exports, and Government

Multiplication, Net Exports, and Government. I. Multiplier. Multiplier effect: a change in a component of agg expenditures leads to a larger change in equilibrium GDP Multiplier = change rGDP/initial change in spending 1) initial change usually investment (more volatile), but can be C,G, I, X

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Closed economy agg expend - PowerPoint PPT Presentation

Multiplication, Net Exports, and Government