Task: Given that the marginal propensity to consume (MPC) is .875:
Problem 1) What is the marginal propensity to save (MPS)?
Problem 2) Calculate the spending multiplier.
Problem 3) If the government stimulates the economy via new spending of $150 million:
(a) What is the total projected spending that this could generate throughout the economy?
(b) What incremental spending would be generated?