一切随缘吧

By textbook, the definition of MPC is that “the fraction of each additional (marginal) dollar of disposable income spent on consumption”. The definition of MPS is that “the fraction of each additional dollar of disposable income not spent on consumption: 1- MPC”. The definition of Multiplier is that “ the multiple by which an initial change in aggregate spending will alter total expenditure after an infinite number of spending cycle: 1/(1 - MPC).

The total after tax income used on consumption increases form $225 to $150 when the Disposable income increases to $100 from zero.  The first groups of data indicate that there is $75 spent on consumption in the $100 Disposable income. The left data confirmed that every $100 Disposable income increasing comes along with $75 spend on consumption cost. Therefore the Marginal Propensity to consume is 0.75 (MGC = 0.75). The Marginal propensity to Save should equal 1 – 0.75 =0.25 (MGS = 0.25).

Then use the expenditure multiplier formula to calculate the multiplier:

Multiplier = 1/(1 - MPC) = 1/(1 – 0.75) =4