# Multiplier Effect Calculator

This online calculator is used to calculate how much a county gross domestic product(GDP) will increase over time at a given MPC and MPS.

# Results...

## How to Calculate Multipliers :

The multiplier is an expectation of how much economic activity an investment will make. They are 3 steps involved to calculate the multipliers.

__1. Calculate the Multiplier :__

**MPS + MPC = 1**

Where,

1 represents all of the additional income. [ Example: MPS = 90% = 90/100 = 0.9 and MPC = 10% = 10/100 = 0.1. Therefore 0.9 + 0.1 = 1 (i.e MPC + MPS = 1) ]

MPS is the marginal propensity to save - the proportion of the additional income that gets saved.

MPC is the marginal propensity to consume - the proportion of the additional income that gets consumed.

**spending multiplier = **

( or )

**Since MPC + MPS = 1, Spending multiplier = **

__2. Calculate the Increase in Spending :__

**Actual Increase in GDP = Spending × spending multiplier**

__3. Add the Increase to the Initial GDP :__

**Total GDP = GDP + Actual Increase in GDP**

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