Question

Difference between static and dynamic multiplier in economics

Answer 1

In simple market terms, static multiplier is called picture that does not move “A still picture’, while a dynamic multiplier is known as a “movie”.

Static economy on one hand is generalized and different aspects of economy are measured with same time pivot, while in dynamic economy, all the points in the economy must be dated. Time in dynamic economy plays a very significant role.

As the name suggests, static multiplier is based on assumptions, while dynamic multiplier considers all the economic variables as realistic, and therefore movable and changeable.