Government Spending Multiplier, Tax Multiplier & Balanced Budget Multiplier Explained

Описание: In this video we cover the government multiplier or government expenditure multiplier, the tax multiplier and the balanced budget multiplier. A multiplier attempts to measure the effect of aggregate spending over time, increase in spending leads to an increase in income and consumption, exceeding the initial spending increase.. So the money spent by a business or a government multiplies in an economy.
In economics, a multiplier broadly refers to an economic factor that, when increased or changed, causes increases or changes in many other related economic variables. 
At this point, we are assuming that the government controls G and T. In this section, we will review three multipliers:
government spending multiplier The ratio of the change in the equilibrium level of output to a change in government spending.
tax multiplier The ratio of change in the equilibrium level of output to a change in taxes.
Because the initial change in aggregate expenditure caused by a tax change of ∆T is (−∆T × MPC), we can solve for the tax multiplier by substitution:
Because a tax cut will cause an increase in consumption expenditures and output and a tax increase will cause a reduction in consumption expenditures and output, the tax multiplier is a negative multiplier:
Simultaneous balanced-budget increase or decrease in the level of government purchases and net taxes: ∆G = ∆T
balanced-budget multiplier The ratio of change in the equilibrium level of output to a change in government spending where the change in government spending is balanced by a change in taxes so as not to create any deficit. The balanced-budget multiplier is equal to 1: The change in Y resulting from the change in G and the equal change in T are exactly the same size as the initial change in G or T.
0:00 Introduction
0:52 Multipliers
2:24 Government spending Multiplier
5:33 Tax Multiplier
6:53 Balanced budget multiplier

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