The formula for the simple spending multiplier is
A) 1/(1 - MPC).
B) MPC + MPS.
C) 1/MPC.
D) 1/(MPC + MPS).

Name: The formula for the simple spending multiplier is A) 1/(1 - MPC). B) MPC + MPS. C) 1/MPC. D) 1/(MPC + MPS).
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Question

Quizplus · Accepted Answer

The simple spending multiplier is calculated as 1/(1 - MPC), where MPC stands for the marginal propensity to consume. This formula is used to estimate the total impact on the economy of a change in spending.

The Formula for the Simple Spending Multiplier Is