The value of the multiplier is likely to fall if there is a fall in
A)consumption.
B)income.
C)total spending.
D)the marginal propensity to consume.

Question

Quizplus · Accepted Answer

The multiplier effect is directly related to the marginal propensity to consume (MPC). If the MPC decreases, the multiplier will also decrease because less of any additional income is being spent, leading to a smaller increase in total economic output.

The Value of the Multiplier Is Likely to Fall If