The equation for of the spending multiplier is
A) 1 / MPE.
B) 1 / (1-MPE).
C) 1 / (1+MPE).
D) 1-MPE.

Name: The equation for of the spending multiplier is A) 1 / MPE. B) 1 / (1-MPE). C) 1 / (1+MPE). D) 1-MPE.
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Question

Quizplus · Accepted Answer

The spending multiplier is calculated as 1 / (1 - MPE), where MPE stands for the marginal propensity to expend. This formula is used to determine the total impact on spending from an initial change in the level of spending.

The Equation for of the Spending Multiplier Is