The smaller the marginal propensity to save,other things constant,_____.
A)the smaller the marginal propensity to consume
B)the larger the multiplier
C)the smaller the multiplier
D)the flatter the consumption function
E)the steeper the saving function

Question

Quizplus · Accepted Answer

The size of the multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. Therefore, the smaller the MPC (marginal propensity to save), the larger the multiplier.

The Smaller the Marginal Propensity to Save,other Things Constant,_____