Question

multiplier is a two edged sword why ?​

Answer 1

Multiplier is a double-edged weapon. It works in the backward direction as much as in the forward direction. ... The higher the MPC, the greater the value of the multiplier and greater the cumulative decline in income.

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Answer 2

A multiplier is a double edge sword as it moves in two directions. If there is an increase in one element it directly affects the increase in other variables.

• Multiplier functions in forward as well as backward direction.
• The expenditure multiplier means that if the expenditure is raised by a small amount, the revenue will increase several times.
• Similarly, if the expenditure is decreased by a certain amount, the multiple decreases in revenue is triggered. This is called the multiplier reverse operating.