As a result of the recent financial crisis,some analysts believed that the MPC in the U.S.declined.If this is t,the value of the multiplier is now
A) smaller.
B) larger.
C) the same.
D) magnified to a larger amount.

Question

Quizplus · Accepted Answer

If the MPC (marginal propensity to consume) declined, it means that people and businesses are spending less and saving more, which reduces the multiplier effect. Therefore, the value of the multiplier is now smaller.

As a Result of the Recent Financial Crisis,some Analysts Believed