The larger the marginal propensity to consume,
A) the larger the multiplier.
B) the larger the marginal propensity to save.
C) the higher the income level of the economy.
D) the smaller the change in income derived from a given change in government spending.

Question

Quizplus · Accepted Answer

The marginal propensity to consume is the portion of each additional dollar of income that is spent on consumption. The larger the marginal propensity to consume, the more of an increase in spending there will be for a given increase in income, leading to a larger multiplier effect.

The Larger the Marginal Propensity to Consume