Spending Multiplier Calculator
FinanceCalculate the fiscal (Keynesian) spending multiplier and the resulting increase in GDP from a spending injection.
Spending Multiplier
How many times the initial spending injection multiplies through the economy.
Increase in GDP
$50,000.00
New Total GDP
$25,050,000.00
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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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