2 The government purchases multiplier Definition:the increase in income resulting from a $1 increase in G. In this model,the G multiplier equals △Y 1 二 △G 1-MPC In the example with MPC =0.8, △Y 1 =5 △G 1-0.8 CHAPTER 10 Aggregate Demand I slide 13 CHAPTER 10 Aggregate Demand I slide 13 The government purchases multiplier In the example with MPC = 0.8, Definition: the increase in income resulting from a $1 increase in G. In this model, the G multiplier equals 1 1 MPC Y G  =  − 1 5 1 0.8 Y G  = =  − 2