Consider a simple macro model with a constant price level and demand-determined output.In the extreme situation where the marginal propensity to spend is zero,the simple multiplier is

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Quizplus · Accepted Answer

The simple multiplier is 1 when the marginal propensity to spend is zero, because any change in autonomous spending leads to an equal change in output, making the multiplier 1.

Consider a Simple Macro Model with a Constant Price Level