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) that as the MPC increases, the value of the multiplier decreases.
D) unrelated because the multiplier relates to the MPS not the MPC.

Question

Quizplus · Accepted Answer

The multiplier refers to how much overall economic activity is affected by a change in an individual's spending, while the MPC (marginal propensity to consume) refers to how much of an individual's income they are likely to spend. As the MPC increases, more of an individual's income will be spent, which means that a change in their spending will have a larger overall effect on the economy, leading to a larger value of the multiplier.

The Relationship Between the Multiplier and the MPC Is