Question

Differentiate between the static multiplier and dynamic multiplier.

Answer 1

Static multiplier	Dynamic multiplier
It is known as simultaneous multiplier timeless and logical multiplier. The change in investment and the resulting change in income are simultaneous.	It is also known as sequence multiplier.
There is also change in MPC as the economy moves from one equilibrium position to another one.	In real life income level doesn’t increase instantly with investment. In fact, there is a time lag between increase in income and consumption expenditure.