The multiplier shows the relationship between changes in a component of spending, say, investment, and the resulting changes in real income and output.

Both leakages and injections to GDP can occur at the same time.

Dissaving occurs where:

The multiplier effect means that:

1 – MPC = MPS.

If Ben’s MPC is .80, this means that he will:

Other things equal, if a change in the tastes of American consumers causes them to purchase more foreign goods at each level of U.S. GDP:

  __________ occurs when a dominant firm sets its price to maximize its profits and the smaller firms in the industry follow by setting their prices to match the dominant firm.  

  The gap between the actual quantity produced by a monopolistically competitive firm and the optimal quantity in a competitive market is known as  

A _____ is a small pouch, or sac, found in the lining, or wall, of a tubular organ such as the colon.​