# A Discussion on the Multiplier Process

The economy starts at equilibrium and the MPC = 0.75. What would be the effect of a $300 increase in government spending once all the rounds of the multiplier process are complete?

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#### Solution Preview

The multiplier is given by

Multiplier = 1/MPS

and we ...

#### Solution Summary

This solution presents a very brief formula and explanation in order to calculate the effect of an increase in taxes when all rounds of the multiplier process is complete. All calculations are provided.

$2.19