Complex multiplier

This article deals with the concept in economics. For the multiplication of complex numbers, see Complex number#Multiplication.

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The complex multiplier is the

• any increase to an injection will be multiplied to result in a higher level of aggregate expenditure.
• Any decrease in an injection will be multiplied to result in a lower level of aggregate expenditure.
• Any increase in a withdrawal will be multiplied to result in a lower level of aggregate expenditure.

and...

• Any decrease in a withdrawal will be multiplied to result in a higher level of aggregate expenditure.

The size of the multiplier should take account of all leakages from the circular flow of income and expenditure occurring in all sectors. The complex multiplier can be measured by the following formula:

${\displaystyle k=1/[MPS+MRT+MPM]=1/MPW\,\!}$

where MPS= Marginal propensity to save, MRT= Marginal rate of taxation, MPM= marginal propensity to import. MPW = Marginal propensity to withdraw

See also

• Fiscal multiplier
• Transfer payments multiplier

Notes

References

• Parry, Greg; Kemp, Steven (2005). Exploring Macroeconomics (7th ed.). South Perth, WA: Tactic Publications.
  ISBN 1-875313-23-0
  .