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Spending Multiplier Calculator

Finance

Calculate the fiscal (Keynesian) spending multiplier and the resulting increase in GDP from a spending injection.

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0.0010.999
USD
$0.00$1,000,000,000,000.00
USD
$0.00$1,000,000,000,000,000.00

Spending Multiplier

6.667

How many times the initial spending injection multiplies through the economy.

USD

Increase in GDP

$50,000.00

New Total GDP

$25,050,000.00

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Odeh Ahwal

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Odeh Ahwal
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Frequently Asked Questions

How is the spending multiplier calculated?

Spending Multiplier = 1 / (1 - MPC), where MPC is the Marginal Propensity to Consume (the fraction of each additional dollar of income that's spent rather than saved).

Why does a higher MPC produce a bigger multiplier?

A higher MPC means more of each round of new income gets re-spent (rather than saved), so each dollar of initial spending ripples through the economy more times before it's fully saved away.

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