The Simplified Spending Multiplier Is Calculated As

question 51

Multiple Choice

The simplified spending multiplier is calculated as:

• A) 1/(1 − MPC).
• B) −1/(1 − MPC).
• C) −MPC/(1 − MPC).
• D) (1 − MPC) × −MPC.

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Definitions:

Price Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in the price of that good, indicative of the flexibility of producers.

Midpoint Method

A technique used in economics to calculate the elasticity between two points on a demand curve by using their average.

Price Elasticity of Supply

A measure of how much the quantity supplied of a good changes in response to a change in the price of that good, indicating the responsiveness of producers.

Midpoint Method

A formula used in economics to calculate the elasticity of a good or service, offering a more accurate measurement by averaging the starting and ending points.