[muhl-tuh-plahy-er] 
| 1. | a person or thing that multiplies. |
| 2. | Arithmetic. a number by which another is multiplied. |
| 3. | Physics. a device for intensifying some effect. |
| mul·ti·pli·er (mŭl'tə-plī'ər) n.
|
Multiplier
In Keynesian economic theory, a factor that quantifies the change in total income as compared to the injection of capital deposits or investments which originally fueled the growth. It is usually used as a measurement of the effects of government spending on income, and it can be calculated as one divided by the marginal propensity to save.
Investopedia Commentary
Keynesian economic theory contends, among other things, that any injection into the economy via investment capital, government spending or the like will result in a proportional increase in overall income at a national level. The basic premise of this theory is that increased spending will have carry-through effects which result in even greater aggregate spending over time. The multiplier itself is an attempt to measure the size of those "carry-through effects".
Related Links
Economics Basics Tutorial
Understanding Supply-Side Economics
Macroeconomic Analysis
See also: Economics, Gross Domestic Product - GDP, Keynesian Economics, Macroeconomics, Marginal Propensity To Consume - MPC, Monetarist Theory, Multiplier Effect
| multiplier (mŭl'tə-plī'ər) Pronunciation Key
The number by which another number is multiplied. |
təˌplaɪ