The value of the multiplier ________ as the marginal propensity to save decreases.

Question

Quizplus · Accepted Answer

The value of the multiplier is directly related to the marginal propensity to consume (MPC), which is the inverse of the marginal propensity to save (MPS). As MPS decreases, MPC increases, which means that each additional dollar of income will result in a larger increase in spending. This leads to a larger value of the multiplier, so the correct answer is C, "increases."

The Value of the Multiplier ________ as the Marginal Propensity