We are given the following:
- Nottingham Technical University students spend £2,760 each
- Total Spending = £50.45 million
- Impact on the economy = £63 million
We must find the value of spending multiplier (m).
We know that
(multiplier) * (total spending) = impact on the economy.
Thus, substituting the given values, we get
`m * 50.45 = 63`
`m = 63/50.45`
`m = 1.2487 ~~ 1.25`.
Thus, the size of the student spending multiplier = 1.25.
This multiplier shows us that for every pound of student spending, the impact on the economy will be 1.25 times more.
For instance, if spending rises by £10, then the total impact of that rise on the economy will be `10*1.25 = £12.5` .