e) Calculations of the multiplier

• What are the two ways to calculate the value of the multiplier?

  By focusing on MPC or withdrawals
• What does MPC stand for in the context of the multiplier?

  Marginal propensity to consume
• What does MPS represent in the calculation of the multiplier?

  Marginal propensity to save
• What does MPT stand for in the context of the multiplier?

  Marginal propensity to tax
• What does MPM represent in the calculation of the multiplier?

  Marginal propensity to import
• How are withdrawals related to the calculation of the multiplier?

  Withdrawals include:

  • Marginal propensity to save (MPS)
  • Marginal propensity to tax (MPT)
  • Marginal propensity to import (MPM)
• how to calculate the multiplier through the MPC?

  1/ (1-MPC)
• how to calculate MPC through withdrawals?

  Multiplier=1/MPW=

  1 / (MPM+MPS+MPT)