No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

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How does the spending multiplier work?

Posted on April 14, 2014 at 7:50 PM

To calculate the spending multiplier, simply divide 1 by the marginal propensity to save (1/MPS or 1/1-MPC). Once you have the spending multiplier, multiply the change in spending by the spending multiplier. This is used within the Keynesian model.

AP Macroeconomics Unit 3 AD/AS & Fiscal Policy

Categories: AP Macroeconomics, Macro Unit 3 AD/AS and Fiscal Policy

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