If the MPC = 0.90,the total change in spending resulting from an initial $200 increase in aggregate spending will be
A)$2,000.
B)$200.
C)$180.
D)$1,800.

Name: If the MPC = 0.90,the total change in spending resulting from an initial $200 increase in aggregate spending will be A)$2,000. B)$200. C)$180. D)$1,800.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The multiplier is 1/(1-MPC) = 1/(1-0.90) = 10. So the total change in spending is $200 x 10 = $2,000.