Please enable JavaScript.
Coggle requires JavaScript to display documents.
DETERMINATION OF NATIONAL INCOME EQUILIBRIUM (DEFINITION AND CALCULATIONS…
DETERMINATION OF NATIONAL INCOME EQUILIBRIUM
INCOME EQUILIBRIUM IN TWO. THREE AND FOUR-SECTOR ECONOMIES
TWO-SECTOR ECONOMY
AD=AS
Y= C+ I
LEAKAGES= INJECTIONS
S= I
THREE-SECTOR ECONOMY
AD= AS
Y= C+ I+ G
LEAKAGES= INJECTIONS
S+ T= I+ G
FOUR SECTOR-ECONOMY
AD=AS
Y= C+ I+ G+ X- M
LEAKAGES=INJECTIONS
S+ T+ M= I+ G +X
DEFINITION AND CALCULATIONS OF THE EXPENDITURE MULTIPLIER
INVESTMENT MULTIPLIER
K= Change in income/ Change in investment
K= 1/ 1-MPC
GOVERNMENT SPENDING MULTIPLIER
K= Change in income/ Change in government spending
K= 1/ 1-MPC
TAX MULTIPLIER
K= Change in income/ Change in tax
K= -MPC/ 1-MPC
BALANCED BUDGET MULTIPLIER
Kb= Kg + Kt
INFLATIONARY GAP AND DEFLATIONARY GAP
INFLATIONARY GAP
Situation where national income exceeds full employment level
DEFLATIONARY GAP
Situation where national income is not at full employment