All of the following are true statements about the multiplier except
A)the multiplier rises as the MPC rises.
B)the smaller the MPS,the larger the multiplier.
C)the multiplier is a value between zero and one.
D)the multiplier effect occurs when autonomous expenditure changes.

Question

Quizplus · Accepted Answer

The multiplier is actually a value greater than one, not between zero and one. The formula for the multiplier is 1/MPS or 1/(1-MPC), which shows that the larger the MPC or the smaller the MPS, the larger the multiplier. The multiplier effect occurs when autonomous expenditure changes, meaning that a change in investment, government spending, or net exports can have a larger impact on aggregate demand through the multiplier effect.

All of the Following Are True Statements About the Multiplier