The relationship between the multiplier and the MPC is
A) converging at higher incomes.
B) that as the MPC increases, so does the value of the multiplier.
C) unrelated because the multiplier relates to the MPS not the MPC.
D) that as the MPC increases, the value of the multiplier decreases.

Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), meaning that as the MPC increases, the value of the multiplier also increases. This is because a higher MPC means that a larger portion of each additional dollar earned is spent, leading to a greater overall increase in spending and a larger impact on the economy.

The Relationship Between the Multiplier and the MPC Is