Every simulated year the government collects revenue = tax rate × GDP and spends spending % × GDP plus interest on existing debt. When spending exceeds revenue the shortfall (deficit) is borrowed and added to the debt tower on the right; a surplus instead shrinks it. The horizontal amber line marks the commonly-cited 60%-of-GDP "safe" threshold — bars that cross it turn red.
Firing a spending shock injects one-off spending ΔG. Because someone's spending is someone else's income, a fraction MPC of it is re-spent, then MPC² of it, then MPC³, and so on — the rings rippling out from the core show each diminishing round. The rounds sum to a geometric series:
Multiplier = 1 / (1 − MPC)
ΔGDP = ΔG × Multiplier
- Tax rate / Spending — set the structural budget balance; spending above revenue runs a deficit that compounds the debt tower.
- Interest rate — debt service is added to next year's spending automatically, so a tall tower makes future deficits worse (crowding out future budgets).
- MPC — higher MPC means more of each round is re-spent, so the multiplier and the GDP bar's jump both grow.
- Shock size — the initial government outlay whose rounds are traced by the expanding rings.