Which of the following is true of the simple spending multiplier
A)It equals the ratio of the marginal propensity to consume to the marginal propensity to save.
B) It equals the difference between the marginal propensity to save and the marginal propensity to consume.
C)It is the reciprocal of the marginal propensity to save.
D)It is the reciprocal of the marginal propensity to consume.
E)It is the sum of the marginal propensity to consume and the marginal propensity to save.

Question

Quizplus · Accepted Answer

The simple spending multiplier is calculated as the reciprocal of the marginal propensity to save (MPS), which determines how much additional spending is generated from an initial change in spending.

Which of the Following Is True of the Simple Spending