The multiplier is larger if the

Name: The multiplier is larger if the
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. Therefore, if the MPC is larger, the denominator is smaller, and the multiplier is larger. The other options (A, B, and D) are all factors that can decrease the multiplier, either by reducing the amount of disposable income available for consumption (A and B) or by diverting some of the additional spending to imports (D).

The Multiplier Is Larger If the