(A Level) The multiplier and national income determination

Learning objectives

Calculate average and marginal propensities to consume, save and import (apc, mpc, aps, mps, apm, mpm) and average and marginal tax rates (art, mrt)

Explain the multiplier process and calculate the multiplier for closed and open economies with and without a government sector, for example k = 1 ÷ (mps + mrt + mpm)

Determine equilibrium national income using the AD (income–expenditure) approach and calculate the change in national income that follows a change in AD

Distinguish the full-employment level of national income from the equilibrium level and analyse inflationary and deflationary gaps