Heterodox
Spending out of income is called induced spending. Equivalently, it is known as ‘endogenous’ spending. This kind of spending rises and falls roughly in line with income. When income rises, households consume more. When income falls, they consume less. Because some spending is induced, an initial act of autonomous spending will cause a multiplied increase in new spending and new income. This is known as the expenditure-multiplier effect.... heteconomistShort & Simple 16 – The...
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