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10 cards from this deck
John Maynard Keynes
Greater-than-proportional increase in national income from ↑ AD
Proportion of extra income spent on consumption
Proportion of extra income that is saved
MPC + MPS = 1
k=1MPSk = \frac{1}{\text{MPS}}k=MPS1
k=11−MPCk = \frac{1}{1 - \text{MPC}}k=1−MPC1
Smaller multiplier (less spending generates less additional income)
Works both ways - amplifies decreases as well as increases
Initial spending generates much larger total economic activity
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