If you spend $100 and the MPC is 0.9, how much spending will this $100 generate in the economy?
A) $1,000
B) $500
C) $250
D) $100

Name: If you spend $100 and the MPC is 0.9, how much spending will this $100 generate in the economy? A) $1,000 B) $500 C) $250 D) $100
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Question

Quizplus · Accepted Answer

The spending multiplier is calculated as 1/(1-MPC). With an MPC of 0.9, the multiplier is 10. Therefore, $100 will generate $100 * 10 = $1,000 in the economy.

If You Spend $100 and the MPC Is 0