Charles W. answered • 04/06/17

AP Certified and an Experienced Micro/Macro teacher

If the MPC is .75 then the MPS is .25. as MPC + MPS must equal 1.

The formula to find the spending multiplier is 1/MPS or 1/1-MPC.

1/MPS = 1/.25 = a spending multiplier of 4

If investment increases by 20n, then the increase in GDP will be multiplied by 4.

20bn x 4 = 80n increase in GDP.