The $100 billion increase in government spending might result in a marginal propensity maximum change in real gross domestic product of $400 billion.
The percentage of a consumer's increase in overall salary that they choose to spend on goods and services rather than save is known as the marginal propensity to consume (MPC) in economics. The marginal propensity to consume, a concept found in Keynesian macroeconomic theory, is gross domestic product determined by dividing the change in consumption by the change in income.
Where C is the change in consumption and Y is the change in income, the marginal propensity to consume is equal to C / Y. MPC is equal to 0.8 / 1 = 0.8 if gross domestic product consumption rises by 80 cents for each additional dollar of income.
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