ABSTRACT
Bringing corporations' behavior into the Multiplier sequence naturally increases its realism; it is obviously unlikely that an increase in autonomous expenditure will bring about an immediate increase of the same magnitude in personal disposable incomes. If time lags are introduced into the Employment Multiplier, its value may be reduced by improvements in labor productivity over time. The fall in productivity due to diminishing returns will then be offset by the rise due to investment, and the dynamic Employment Multiplier will be a good deal smaller than the static one. In all Multipliers, the basic principle is that changes in the level of activity are initiated by changes in the autonomous elements of demand. If consumers' demand is related to income through a consumption function of some kind, there are certain consequences for the equilibrium of the economy. Payments by consumers to the various industries represent purchases of the industries' products; payments by industries to consumers are wages, dividends, and interest.
