The greater the marginal propensity to consume (MPC) in the economy, the greater the spending multiplier.

Name: The greater the marginal propensity to consume (MPC) in the economy, the greater the spending multiplier.
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Quizplus · Accepted Answer

The spending multiplier is calculated as 1/MPS (where MPS is the marginal propensity to save). Since MPC + MPS = 1, a higher MPC means a lower MPS, which in turn means a higher spending multiplier. Therefore, the statement is true.

The Greater the Marginal Propensity to Consume (MPC) in the Economy