In a closed economy with no taxes, if the marginal propensity to consume is always 0.90, then the value of the multiplier will be

In a closed economy with no taxes, the investment multiplier (also known as the spending multiplier) measures the total increment in equilibrium output resulting from an initial change in autonomous expenditure [1]. The size of this multiplier is determined by the marginal propensity to consume (MPC), which represents the fraction of additional income that consumers spend [2]. The standard formula for the multiplier in this simple Keynesian model is 1 / (1 - MPC). Given that the MPC is 0.90, the calculation becomes 1 / (1 - 0.90), which simplifies to 1 / 0.10 [2]. This results in a multiplier value of 10.00. This indicates that for every unit of initial autonomous spending, the total national income or GDP will increase by ten units.

Sources

1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 4: Determination of Income and Employment > 4.3.3 The Multiplier Mechanism > p. 62
2. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 4: Determination of Income and Employment > Some Definitions > p. 55