The Spending Multiplier: How changes in spending create large ripple effects through the economy

Solina Lindahl

The Spending Multiplier

How changes in spending create large ripple effects through the economy

Authors

Solina Lindahl Cal Poly SLO

Abstract

In this activity we develop the intuition of the marginal propensity to consume and to save. We then explore the impact of one person's spending on the economy through several questions and applications. Finally we develop the idea of the formal multiplier and its calculation.

ToC Image: The Ripple Effects of Spending

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Published

2025-08-04

How to Cite

Lindahl, S. (2025). The Spending Multiplier: How changes in spending create large ripple effects through the economy. POGIL Activity Clearinghouse, 6(1). Retrieved from https://pac.pogil.org/index.php/pac/article/view/472