Spending Multipliers
Source: Council for Economic Education (EconEdLink) | Type: Lesson
Students learn the definition of marginal propensity to consume and marginal propensity to save. After spending time practicing computing what these terms mean, students participate in a simulation to demonstrate how the marginal propensity to consume and marginal propensity to save influence the economy through the multiplier effect. Then they learn about the simple spending multiplier, and how economists may use the marginal propensities to consume and save in order to approximate the total effect on the overall economy.
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