Chapter Eleven: Module Intro -- The Output Multiplier
In this module, we explain the output multiplier. The concept of the output multiplier can be one of the more difficult concepts for students to grasp. The idea is that a one dollar change in some autonomous component of Aggregate Demand leads to a more than one dollar change in new output. There seems to be something that happens that magically "creates" output. The process is not magic, however. It is real, at least in the short term.
We recommend that you read the lecture notes first and experiment with the interactive multiplier table. Then take the on-line quiz to test your knowledge. Finally, read the Module Summary to reinforce the main concepts.
Last update: August 2003