Aggregate activity and demand: Aggregate demand issues

5.4 Aggregate demand issues

5.4.1 Leakages and injections

Activities

Wikipedia: "Five Sector Model"

• Read this section, including the table listing leakages and injections. You should be able to write a formula equating the leakages to the injections and place each item into the expanded, comprehensive, and important version of the circular flow model.

5.4.2 Multipliers

Activities

Wikibooks: "Macroeconomics: Multiplier Process"

• Read this article about the simple multiplier. You should be able to use the formula from this article to calculate the multiplier's numeric value given MPC = 0.80. The result suggests an outcome such as income or GDP increases about five times the amount of a change in consumer expenditures, as articulated in the readings.

5.4.3 Adjustments

Activities

Khan Academy: "The Business Cycle"

• Watch this lecture about the business cycle.