Kara-Lynn

What Is the Multiplier Effect?

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Formula and Example. The multiplier effect is the additional impact on national income of an increase in spending. The multiplier is greater than 1 because an increase in spending creates a ripple effect of increased economic activity. The size of the multiplier depends on the marginal propensity to consume, which is the percentage of extra … Read more

How Countertrade Works.

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In countertrade, two companies agree to trade goods or services without using any currency. Typically, one company will provide goods or services to the other company in exchange for goods or services of equal value from the other company. In some cases, one company may provide goods or services to the other company in exchange … Read more