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Homework answers / question archive / A) What is the expenditure multiplier? B) What is its significance for Keynesian economics?
A) What is the expenditure multiplier?
B) What is its significance for Keynesian economics?
A) Expenditure Multiplier is an economic measure that reflects the change in the aggregate production brought about by changes in the autonomous expenditures. Autonomous expenditures include government purchases, consumption and investment expenditures, and net exports.
B) Keynesian economics came to the forefront in the study of economics in the year 1930's after the greatest economic depression came up. Keynesian theory was considered important in the "Golden Age of Economic Growth" post the second world war. Keynes emphasized the role of the government to push up the aggregate demand to help the economy come out of depression. Prior to Keynes, the role of supply-side economics was considered important for economic growth and development. Hence, expenditure multipier