Discuss the working of Multiplier. How Equilibrium level of Income is attained when S>I?
Dear students
hence, the multiplier is 4.
Note: a2, a1 are terms of geometric series.
The equilibrium level of Income when S>I
Refer the following link and scroll down to the topic when savings exceeds investment under the main topic Adjustment Mechanism.
https://www.meritnation.com/cbse-class-12-commerce/economics/introductory-macroeconomics/determination-of-income-and-employment/studymaterial/59_16_341_1989_5844
Regards
hence, the multiplier is 4.
Note: a2, a1 are terms of geometric series.
The equilibrium level of Income when S>I
Refer the following link and scroll down to the topic when savings exceeds investment under the main topic Adjustment Mechanism.
https://www.meritnation.com/cbse-class-12-commerce/economics/introductory-macroeconomics/determination-of-income-and-employment/studymaterial/59_16_341_1989_5844
Regards