FIGURE 7 THE MULTIPLIER PROCESS
imageAn initial $100 of spending generates more spending because of the multiplier process shown in this figure. With an MPC = 0.75 in the second round, $75 is spent and $25 is saved. In the third round, $56.25 of the previous $75 is spent and $18.75 is saved, and so on. Total spending is $400, and total saving is $100 when all rounds are completed.