Question: What is multiplier formula?

The multiplier is the amount of new income that is generated from an addition of extra income. The marginal propensity to consume is the proportion of money that will be spent when a person receives a certain amount of money. The formula to determine the multiplier is M = 1 / (1 - MPC).The multiplier is the amount of new income that is generated from an addition of extra income. The marginal propensity to consume

What is the multiplier formula economics?

The formula for the simple spending multiplier is 1 divided by the MPS. Lets try an example or two. Assume that the marginal propensity to consume is 0.8, which means that 80% of additional income in the economy will be spent. So, 1 minus the MPC is going to be 1 - 0.8, which is 0.2.

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