The larger a country's marginal propensity to consume, the lower is the value of its multiplier.

Question

Quizplus · Accepted Answer

The opposite is true. The larger a country's marginal propensity to consume, the higher is the value of its multiplier. This is because a higher marginal propensity to consume means that a larger proportion of any additional income will be spent, leading to a greater increase in aggregate demand and economic activity.

The Larger a Country's Marginal Propensity to Consume, the Lower