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The Multiplier Effect

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

Last updated 21 Mar 2021

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This short video tutorial looks at the national income multiplier and the factors that affect the numerical value of the multiplier.

Explaining the multiplier effect and the multiplier process

Key revision question: What is the multiplier?

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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