Spending Multiplier Calculator

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MPC is the fraction of each extra dollar of income that households spend. MPS is the fraction saved. They always add to 1, so you only need one.
A value between 0 and 1. For example, 0.8 means 80 cents of every extra dollar of income is spent, 20 cents is saved.
The initial increase in government spending, investment, or exports injected into the economy.
USD
If you enter the current level of GDP, the calculator will also show the new total GDP after the multiplier effect.
USD
Toggle to also compute the tax multiplier (the GDP impact of a change in taxes rather than spending).
Spending MultiplierVery strong multiplier
5

1 / MPS = 1 / (1 - MPC). Every $1 of spending creates this many dollars of GDP.

MPS0.2
MPC0.8
Change in GDP50,000USD
Tax Multiplier-4
Balanced-Budget Multiplier1
5 x
Weak<1.5Moderate1.5-3Strong3-5Very Strong5+

Spending multiplier is 5.00x - strong stimulus effect.

  • A $10,000 injection will expand GDP by roughly $50,000.
  • With MPC = 0.80, households spend 80% of each additional dollar and save 20%. The higher the MPC, the larger the multiplier.
  • An equivalent tax cut generates a multiplier of 4.00, which is smaller than the spending multiplier of 5.00 because some of the tax cut is saved rather than spent.
  • Real-world multipliers are typically smaller than the pure Keynesian figure due to leakages like imports, inflation, crowding-out, and incomplete income cycles.

Next stepA multiplier above 3 implies very low saving rates. Check whether your MPC figure accounts for taxes and imports, since an open-economy multiplier is typically 1 / (MPS + MPM + MPT).

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