An increase in the value of the multiplier can be caused by
A) a decrease in the marginal propensity to consume.
B) an increase in the marginal propensity to import.
C) an increase in autonomous consumption expenditure.
D) an increase in the marginal propensity to consume.

Question

Quizplus · Accepted Answer

The multiplier effect is inversely related to the marginal propensity to save (MPS), which is the complement of the marginal propensity to consume (MPC). Therefore, an increase in the MPC leads to a larger multiplier effect, as more of each dollar of income is spent, leading to further income and spending.

An Increase in the Value of the Multiplier Can Be