The relationship between the multiplier and the MPC is
A) that as the MPC increases, so does the value of the multiplier.
B) that as the MPC increases, the value of the multiplier decreases.
C) unrelated because the multiplier relates to the MPS, not the MPC.
D) converging at higher incomes.

Question

Quizplus · Accepted Answer

The multiplier effect is directly related to the marginal propensity to consume (MPC). As the MPC increases, indicating that consumers are spending a larger portion of any additional income, the multiplier effect also increases, amplifying the impact of initial spending on the overall economy.

The Relationship Between the Multiplier and the MPC Is