IB DP Macroeconomics · HL

The multiplier

One injection of spending becomes someone's income, who spends part of it again, and again — each round smaller as saving, tax and imports leak away. Move the sliders and watch the ripple build toward k × the injection.

Each round re-spends 80% of the last: the injection of 100, then 11 re-spending rounds (grey = all later rounds combined).

MPC (propensity to consume)0.80 · MPS 0.20Injection (ΔJ)100

Multiplier k: 5.00
Total ΔY: 500
Leakage per round: 20%

One injection becomes a chain of smaller and smaller spending rounds — the higher the share that leaks to saving, tax and imports, the faster the ripple dies and the smaller the multiplier.