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Expenditure Multiplier Formula

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Expenditure Multiplier is a concept used in economics to quantify the impact of changes in autonomous spending on overall economic output. Check FAQs

EM = \frac{INCPI}{ΔG}

EM - Expenditure Multiplier?INCPI - Initial Consumer Price Index?ΔG - Change in Government Spending?

Expenditure Multiplier Example

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Here is how the Expenditure Multiplier equation looks like with Values.

Here is how the Expenditure Multiplier equation looks like with Units.

Here is how the Expenditure Multiplier equation looks like.

0.8333 = \frac{100}{120}

0.8333 = \frac{100}{120}

0.8333 = \frac{100}{120}

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Expenditure Multiplier Solution

Follow our step by step solution on how to calculate Expenditure Multiplier?

FIRST Step Consider the formula

EM = \frac{INCPI}{ΔG}

Next Step Substitute values of Variables

∴

EM = \frac{100}{120}

Next Step Prepare to Evaluate

∴

EM = \frac{100}{120}

Next Step Evaluate

∴

EM = 0.833333333333333

LAST Step Rounding Answer

∴

EM = 0.8333

Expenditure Multiplier Formula Elements

Variables

Expenditure Multiplier

Expenditure Multiplier is a concept used in economics to quantify the impact of changes in autonomous spending on overall economic output.

Symbol: EM

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Expenditure Multiplier

Initial Consumer Price Index

Initial Consumer Price Index is a measure that examines the initial weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Symbol: INCPI

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Initial Consumer Price Index

Change in Government Spending

Change in Government Spending refers to any alteration made by the government in the amount of money it allocates towards its expenditures.

Symbol: ΔG

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Change in Government Spending

Other formulas in Macroeconomics category

Go Growth Rate of Money Supply

g m = R + g y

Go Real Effective Exchange Rate

REER = \frac{CPI d \cdot NEER}{CPI f}

Go Real Gross Domestic Product Per Capita

RGDPPC = \frac{RG}{TP}

Go Real Wage

RW = \frac{NW}{CPI}

How to Evaluate Expenditure Multiplier?

Expenditure Multiplier evaluator uses Expenditure Multiplier = Initial Consumer Price Index/Change in Government Spending to evaluate the Expenditure Multiplier, Expenditure Multiplier is a measurement mechanism to evaluate the total change in real GDP that results from a change in autonomous expenditure, such as investment, government spending, or exports. Expenditure Multiplier is denoted by EM symbol.

How to evaluate Expenditure Multiplier using this online evaluator? To use this online evaluator for Expenditure Multiplier, enter Initial Consumer Price Index (INCPI) & Change in Government Spending (ΔG) and hit the calculate button.

FAQs on Expenditure Multiplier

What is the formula to find Expenditure Multiplier?

The formula of Expenditure Multiplier is expressed as Expenditure Multiplier = Initial Consumer Price Index/Change in Government Spending. Here is an example- 0.833333 = 100/120.

How to calculate Expenditure Multiplier?

With Initial Consumer Price Index (INCPI) & Change in Government Spending (ΔG) we can find Expenditure Multiplier using the formula - Expenditure Multiplier = Initial Consumer Price Index/Change in Government Spending.

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Expenditure Multiplier Formula

Expenditure Multiplier Example

Expenditure Multiplier Solution

Expenditure Multiplier Formula Elements

Other formulas in Macroeconomics category

How to Evaluate Expenditure Multiplier?

FAQs on Expenditure Multiplier

Variable Name