How can one determine the expenditure multiplier in an economic model?

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1204999

2026-04-09 23:30

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To determine the expenditure multiplier in an economic model, you can use the formula: Expenditure Multiplier 1 / (1 - Marginal Propensity to Consume). The Marginal Propensity to Consume is the proportion of additional income that a person or household spends rather than saves. By calculating this ratio, you can understand how changes in spending affect overall economic activity.

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