Unit 3: Macroeconomic Policy

Lesson 10a: Fiscal Policy - The Spending Multiplier

Key Formulas

("Y" means "income" or real GDP) APC = C / Y MPC = C / Y APS = S / Y MPS = S / Y APC + APS = 1 MPC + MPS = 1 GDP = Initial Spending x Multiplier Simple Multiplier = 1 / MPS

HOME Lesson 10a