Wednesday, February 23 - Friday, February 25th, 2011

Building the Keynesian Multiplier


Students shall be able to

  1. Define average propensity to consume.

  2. Define marginal propensity to consume.

  3. Define average propensity to save.

  4. Define marginal propensity to save.

  5. Describe and define the multiplier effect.

  6. State the relationships between the multiplier and the MPS and the MPC.

  7. Explain the impact of positive (or negative) net exports on aggregate expenditures and the equilibrium level of real GDP.

  8. Describe how government purchases affect equilibrium GDP.

  9. Describe how personal taxes affect equilibrium GDP

  10. Explain what is meant by the balanced-budget multiplier and why it equals 1.


  1. Videos on John Maynard Keynes and Fiscal Policy.

  2. Lecture/Discussion of key concepts from chapters 9 and 10 in the McConnell text. [Note that most of these chapters is dedicated to developing the "aggregate expenditures" model. This model is not on the AP exam.]


  1. Watch Economics USA: John Maynard Keynes and answer the questions (Word or PDF).

  2. Complete "Building the Keynesian Multiplier" (Word or PDF) using chapters 9 and 10 in the McConnell text. [You need not read the entirety of these chapters.]

  3. Watch Economics USA: Fiscal Policy and answer the questions (Word or PDF)

  4. Take notes on the lecture.

  5. Read McConnell & Brue chapter 11 for Thursday.



Monitor and adjust to check understanding.