L'effet multiplicateur dans l'économie

Increase in injection by the Govt. in the form of capital expenditure or purchase of services will lead to an increase in the equilibrium level of National income. In creased injection means increased investment, increased employment, increased income and then increased buying power and then increased consumption expenditure which in turn leads to increased demand, increased investment ad increased employment and this process continues, with increased savings occurring as leakages and resulting in tapering off of incremental income at successive rounds. This is the normal Keynesian Income Multiplier.

In economics, the multiplier effect refers to the idea that an initial spending rise can lead to an even greater increase in national income. In other words, an initial change in aggregate demand can cause a further change in aggregate output for the economy.

The multiplier effect is a tool used by governments to restimulate aggregate demand. This can be done in a period of recession or economic uncertainty. The money invested by a government creates more jobs, which in turn will mean more spending and so on.

For example: a company spends 1 million to build a factory. The money does not disappear, but rather becomes wages to builders, revenue to suppliers etc. The builders will have higher disposable income as a result, so consumption, hence aggregate demand will rise as well. Say that all of these workers combined spend 2 million rupees in total, since there was an initial 1 million input which created a 2 million output, the multiplier is 2.

Another example is when a tourist visits somewhere they need to buy the plane ticket, catch a taxi from the airport to the hotel, book in at the hotel, eat at the restaurant and go to the movies or tourist destination. The taxi driver needs petrol (gasoline) for his cab, the hotel needs to hire the staff, the restaurant needs attendants and chefs, and the movies and tourist destinations need staff and cleaners. It must be noted that the extent of the multiplier effect is dependent upon the marginal propensity to consume and marginal propensity to import.

When an autonomous component of Aggregate Demand changes, equilibrium output will change. The change in output will be even larger than the initial change in Aggregate Demand resulting from increased injection. This result for the change in Y to be greater than the initial change in Aggregate Demand is known as the multiplier effect. For example, if the marginal propensity to consume (MPC) is 0.80 and autonomous investment increases by rs200, equilibrium output will ultimately change by rs1,000, not r

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