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  • Multiplier

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    The theory of the multiplier states that national income increases by a multiple amount due to an increase in investment. The multiplier is a numerical value that indicates how much national income will increase from a given increase in investment. The concept of the multiplier was first developed by F.A. Kahn in the 1930s to show the increase in employment from initial investment, and was later refined by Keynes to refer to the increase in total income resulting from more investment and income.

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    The theory of the multiplier states that national income increases by a multiple amount due to an increase in investment. The multiplier is a numerical value that indicates how much national income will increase from a given increase in investment. The concept of the multiplier was first developed by F.A. Kahn in the 1930s to show the increase in employment from initial investment, and was later refined by Keynes to refer to the increase in total income resulting from more investment and income.

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    7 views1 page

    Multiplier

    Uploaded by

    jesurajpradeep
    The theory of the multiplier states that national income increases by a multiple amount due to an increase in investment. The multiplier is a numerical value that indicates how much national income will increase from a given increase in investment. The concept of the multiplier was first developed by F.A. Kahn in the 1930s to show the increase in employment from initial investment, and was later refined by Keynes to refer to the increase in total income resulting from more investment and income.

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    Multiplier: The theory of multiplier tells that national income increases by some multiple of I.

    The numerical value of the multiple is known as the investment multiplier. Thus, multiplier is a number which gives a multiple increase in national income due to a given increase in investment. if m is the multiplier then Y = I x

    m, and m = Y/I.
    y The concept of multiplier was first developed by F.A.Kahn in the early 1930s. The concept was later refined by Keynes. F.A.Kahn developed the concept of multiplier with reference to the increase in employment,direct as well as indirect,as a result of initial increase in investment and employment. Later on Keynes propounded the concept of multiplier with reference to the increase in total income,direct as well as indirect,as a result of original increase in investment and income. Kahn s Multiplier is known as Employment Multiplier and Keynes multiplier is known as Investment or Income multiplier . The Value of Multiplier or k = 1/1-MPC

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