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Explaining the Multiplier and the Accelerator

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, WJEC

Last updated 27 Jun 2020

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In this recorded revision webinar, I take students through the concepts of the Multiplier and Accelerator effects - two key topics in AS Macro Economics.

You can download the slides used in this revision webinar here.

Accelerator effect:

Where planned capital investment is linked positively to the past and expected growth of consumer demand or national income

Multiplier effect:

If there is an initial injection (e.g. a rise in exports), then the final increase in aggregate demand and real GDP will be greater. The size of the multiplier coefficient is affected by the marginal rate of withdrawal / leakage from the circular flow of income.

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