# 11.3 The expenditure-output (or keynesian cross) model  (Page 11/41)

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 Original increase in aggregate expenditure from government spending 100 Which is income to people throughout the economy: Pay 30% in taxes. Save 10% of after-tax income. Spend 10% of income on imports. Second-round increase of… 70 – 7 – 10 = 53 Which is $53 of income to people through the economy: Pay 30% in taxes. Save 10% of after-tax income. Spend 10% of income on imports. Third-round increase of… 37.1 – 3.71 – 5.3 = 28.09 Which is$28.09 of income to people through the economy: Pay 30% in taxes. Save 10% of after-tax income. Spend 10% of income on imports. Fourth-round increase of… 19.663 – 1.96633 – 2.809 = 14.89

Thus, over the first four rounds of aggregate expenditures, the impact of the original increase in government spending of $100 creates a rise in aggregate expenditures of$100 + $53 +$28.09 + $14.89 =$195.98. [link] shows these total aggregate expenditures after these first four rounds, and then the figure shows the total aggregate expenditures after 30 rounds. The additional boost to aggregate expenditures is shrinking in each round of consumption. After about 10 rounds, the additional increments are very small indeed—nearly invisible to the naked eye. After 30 rounds, the additional increments in each round are so small that they have no practical consequence. After 30 rounds, the cumulative value of the initial boost in aggregate expenditure is approximately $213. Thus, the government spending increase of$100 eventually, after many cycles, produced an increase of $213 in aggregate expenditure and real GDP. In this example, the multiplier is$213/$100 = 2.13. ## Calculating the multiplier Fortunately for everyone who is not carrying around a computer with a spreadsheet program to project the impact of an original increase in expenditures over 20, 50, or 100 rounds of spending, there is a formula for calculating the multiplier. The data from [link] and [link] is: • Marginal Propensity to Save (MPS) = 30% • Tax rate = 10% • Marginal Propensity to Import (MPI) = 10% The MPC is equal to 1 – MPS, or 0.7. Therefore, the spending multiplier is: A change in spending of$100 multiplied by the spending multiplier of 2.13 is equal to a change in GDP of $213. Not coincidentally, this result is exactly what was calculated in [link] after many rounds of expenditures cycling through the economy. #### Questions & Answers WHAT IS QUADRATIC EQUATION? Charles Reply WHAT IS SYSTEM OF LINEAR INEWUALITIES? Charles WHAT IS SYSTEM OF LINEAR INEWUALITIES? Charles complex perform Angel what is equation? Charles Reply what are equations? Charles Definition of economics according to karl Marx Thomas malthus Jeremy bentham David Ricardo J.K Rakiya Please help me is assignment Rakiya The 47th problem of Euclid Kenneth show that the set of all natural number form semi group under the composition of addition Nikhil Reply what is the meaning Dominic explain and give four Example hyperbolic function Lukman Reply _3_2_1 felecia ⅗ ⅔½ felecia _½+⅔-¾ felecia The denominator of a certain fraction is 9 more than the numerator. If 6 is added to both terms of the fraction, the value of the fraction becomes 2/3. Find the original fraction. 2. The sum of the least and greatest of 3 consecutive integers is 60. What are the valu SABAL Reply 1. x + 6 2 -------------- = _ x + 9 + 6 3 x + 6 3 ----------- x -- (cross multiply) x + 15 2 3(x + 6) = 2(x + 15) 3x + 18 = 2x + 30 (-2x from both) x + 18 = 30 (-18 from both) x = 12 Test: 12 + 6 18 2 -------------- = --- = --- 12 + 9 + 6 27 3 Pawel 2. (x) + (x + 2) = 60 2x + 2 = 60 2x = 58 x = 29 29, 30, & 31 Pawel ok Ifeanyi on number 2 question How did you got 2x +2 Ifeanyi combine like terms. x + x + 2 is same as 2x + 2 Pawel x*x=2 felecia 2+2x= felecia ×/×+9+6/1 Debbie Q2 x+(x+2)+(x+4)=60 3x+6=60 3x+6-6=60-6 3x=54 3x/3=54/3 x=18 :. The numbers are 18,20 and 22 Naagmenkoma Mark and Don are planning to sell each of their marble collections at a garage sale. If Don has 1 more than 3 times the number of marbles Mark has, how many does each boy have to sell if the total number of marbles is 113? mariel Reply Mark = x,. Don = 3x + 1 x + 3x + 1 = 113 4x = 112, x = 28 Mark = 28, Don = 85, 28 + 85 = 113 Pawel how do I set up the problem? Harshika Reply what is a solution set? Harshika find the subring of gaussian integers? Rofiqul hello, I am happy to help! Shirley Reply please can go further on polynomials quadratic Abdullahi hi mam Mark I need quadratic equation link to Alpa Beta Abdullahi Reply find the value of 2x=32 Felix Reply divide by 2 on each side of the equal sign to solve for x corri X=16 Michael Want to review on complex number 1.What are complex number 2.How to solve complex number problems. Beyan yes i wantt to review Mark 16 Makan x=16 Makan use the y -intercept and slope to sketch the graph of the equation y=6x Only Reply how do we prove the quadratic formular Seidu Reply please help me prove quadratic formula Darius hello, if you have a question about Algebra 2. I may be able to help. I am an Algebra 2 Teacher Shirley Reply thank you help me with how to prove the quadratic equation Seidu may God blessed u for that. Please I want u to help me in sets. Opoku what is math number Tric Reply 4 Trista x-2y+3z=-3 2x-y+z=7 -x+3y-z=6 Sidiki Reply can you teacch how to solve that🙏 Mark Solve for the first variable in one of the equations, then substitute the result into the other equation. Point For: (6111,4111,−411)(6111,4111,-411) Equation Form: x=6111,y=4111,z=−411x=6111,y=4111,z=-411 Brenna (61/11,41/11,−4/11) Brenna x=61/11 y=41/11 z=−4/11 x=61/11 y=41/11 z=-4/11 Brenna 6 years, a bond that paid 5.5% earned$594 interest.
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