Other things equal, an increase in the marginal propensity to save will __________ the size of the "autonomous spending multiplier" (or "the multiplier") ; other things equal, an Increase in the marginal tax rate __________ the size of the "autonomous spending multiplier" (or "the multiplier") .

Question

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An increase in the marginal propensity to save means that households are saving more of their income, which means that there is less spending in the economy. This decrease in spending will decrease the multiplier. An increase in the marginal tax rate will also decrease the multiplier because it means that households have less disposable income to spend, leading to decreased spending in the economy.

Other Things Equal, an Increase in the Marginal Propensity to Save