Which of the following is a true statement about the multiplier?
A)The multiplier rises as the MPC rises.
B)The smaller the MPC,the larger the multiplier.
C)The multiplier is a value between zero and one.
D)The multiplier effect does not occur when autonomous expenditure decreases.

Question

Quizplus · Accepted Answer

The multiplier is directly related to the marginal propensity to consume (MPC); as the MPC increases, the multiplier also increases because each unit of income spent generates further income in the economy.

Which of the Following Is a True Statement About the Multiplier