{"id":608,"date":"2015-06-19T21:53:05","date_gmt":"2015-06-19T21:53:05","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/accmacro\/chapter\/the-expenditure-multiplier\/"},"modified":"2023-07-14T19:08:11","modified_gmt":"2023-07-14T19:08:11","slug":"the-expenditure-multiplier","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/accmacro\/chapter\/the-expenditure-multiplier\/","title":{"raw":"Reading: The Expenditure Multiplier","rendered":"Reading: The Expenditure Multiplier"},"content":{"raw":"<h2>The Expenditure Multiplier<\/h2>\nOne of the key claims of Keynes was the existence of\u00a0 an \u201cexpenditure multiplier.\u201d Remember from previous readings\u00a0that Keynes said that aggregate demand was highly volatile, that even if the economy started at a level of GDP where equaled it\u2019s potential so that the economy was at full employment, AD could shift abruptly causing a recessionary or inflationary gap. In the Keynesian model, not only did changes in spending cause GDP to change, but the change in GDP was more than proportionate than the initial change in autonomous spending. In other words, aggregate demand is powerful since a change in spending results in a multiplied change in GDP. This spending multiplier was part of the reasoning behind the Keynesian view that fiscal policy is a powerful tool for managing the economy.\n<h2>Self Check: The Expenditure Multiplier<\/h2>\nAnswer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.\n<p class=\"p1\"><span class=\"s1\">You\u2019ll have more success on the Self Check if you\u2019ve completed the Reading in this section.<\/span><\/p>\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\n\nhttps:\/\/assessments.lumenlearning.com\/assessments\/570","rendered":"<h2>The Expenditure Multiplier<\/h2>\n<p>One of the key claims of Keynes was the existence of\u00a0 an \u201cexpenditure multiplier.\u201d Remember from previous readings\u00a0that Keynes said that aggregate demand was highly volatile, that even if the economy started at a level of GDP where equaled it\u2019s potential so that the economy was at full employment, AD could shift abruptly causing a recessionary or inflationary gap. In the Keynesian model, not only did changes in spending cause GDP to change, but the change in GDP was more than proportionate than the initial change in autonomous spending. In other words, aggregate demand is powerful since a change in spending results in a multiplied change in GDP. This spending multiplier was part of the reasoning behind the Keynesian view that fiscal policy is a powerful tool for managing the economy.<\/p>\n<h2>Self Check: The Expenditure Multiplier<\/h2>\n<p>Answer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.<\/p>\n<p class=\"p1\"><span class=\"s1\">You\u2019ll have more success on the Self Check if you\u2019ve completed the Reading in this section.<\/span><\/p>\n<p>Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.<\/p>\n<p>https:\/\/assessments.lumenlearning.com\/assessments\/570<\/p>\n","protected":false},"author":32,"menu_order":22,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-608","chapter","type-chapter","status-publish","hentry"],"part":599,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/608","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/users\/32"}],"version-history":[{"count":1,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/608\/revisions"}],"predecessor-version":[{"id":609,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/608\/revisions\/609"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/parts\/599"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/608\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/media?parent=608"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapter-type?post=608"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/contributor?post=608"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/license?post=608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}