The size of the expenditure multiplier is influenced by
I. the marginal propensity to consume.
Ii. autonomous spending. iii. the marginal tax rate.
A)i only
B)i and iii
C)ii only
D)ii and iii
E)iii only

Question

Quizplus · Accepted Answer

The expenditure multiplier is influenced by the marginal propensity to consume (MPC) and the marginal tax rate. A higher MPC increases the multiplier, while a higher marginal tax rate decreases it. Autonomous spending does not directly affect the size of the multiplier.

The Size of the Expenditure Multiplier Is Influenced by