Super Multiplier: (k and β interaction)
The super multiplier is greater than simple multiplier which
includes only autonomous investment and no induced investment, while super
multiplier includes induced investment.
In order to measure the total effect of initial investment on
income, Hicks has combined the k and β mathematically and given it the name of
the Super Multiplier. The super multiplier is worked out by combining both
induced consumption and induced investment.
The combined effect of the multiplier and the accelerator is also
called the leverage effect which may lead the economy to very high or low level
of income propagation.
Y= C + IA + IP
Y = Aggregate income.
C = Consumption expenditure
IA= autonomous investment
IP= induced private investment