How do you calculate a muptiplier?

Answer 1

To calculate a multiplier, you typically use the formula: Multiplier = 1 / (1 - MPC), where MPC stands for the marginal propensity to consume. This formula reflects how much additional economic activity is generated from an initial change in spending. Alternatively, in finance, the multiplier can refer to the ratio of total output to the initial input, such as in the context of investment or fiscal policy.