The simple multiplier is defined as:
A)1 - MPS.
B)change in GDP *initial change in spending.
C)change in GDP/initial change in spending.
D)change in GDP - initial change in spending.

Question

Quizplus · Accepted Answer

The simple multiplier is calculated as the change in GDP divided by the initial change in spending. In other words, the multiplier shows how much GDP will change for every unit of initial spending. Therefore, choice C is the correct definition of the simple multiplier.

The Simple Multiplier Is Defined As