... as demand fell, there would be less demand for labour. However the multiplier effect denotes the trend where there is an increase in the rate of spending there will be a proportionate increase in national income, the value of the multiplier depends on the percentage of the extra income that is spent on the marginal propensity to consume. Therefore, the larger the increase in consumption of income, the larger the multiplier effect. Due to the incentive for new investment people are creating aggregate demand followed closely by aggregate supply this in turn can reduce unemployment. Figures released on Friday showed American unemployment fell from 5.6% to 5.5% in February. Although the tax cuts have put an end to threats of a further recession, other sectors will be affected by the reduced funds such as the private sector and public services, once the economy has stabilised Lindsay will be obliged ...

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