Question
The equation for the spending multiplier is:
1 / (1 - MPC).
1 - MPC.
1 - (MPC - MPS).
MPC/MPS.
none of these.
1 / (1 - MPC).
1 - MPC.
1 - (MPC - MPS).
MPC/MPS.
none of these.
Answers
GPT-5 mini
1 / (1 - MPC)
Explanation: The spending (or Keynesian) multiplier = 1 + MPC + MPC^2 + ... = 1/(1 − MPC), which is also equal to 1/MPS.
Explanation: The spending (or Keynesian) multiplier = 1 + MPC + MPC^2 + ... = 1/(1 − MPC), which is also equal to 1/MPS.