The marginal propensity to save (MPS) is equal to (1

Name: The marginal propensity to save (MPS) is equal to (1 - MPC). Higher the MPS, higher is the multiplier.
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Question

The marginal propensity to save (MPS) is equal to (1 - MPC). Higher the MPS, higher is the multiplier.

Quizplus · Accepted Answer

The marginal propensity to save (MPS) is indeed equal to (1 - MPC), but a higher MPS actually leads to a lower multiplier, not higher. The multiplier effect is inversely related to the MPS.