The higher the marginal propensity to consume,the
A)smaller will be the simple multiplier.
B)more insulated will be consumption spending from exogenous shocks to the economy.
C)less effective will be any given monetary or fiscal policy.
D)more unstable the economy will be.

Question

Quizplus · Accepted Answer

A higher marginal propensity to consume means that consumers are likely to spend a larger portion of any additional income they receive. This can lead to greater fluctuations in economic activity, making the economy more unstable in response to changes in income or economic conditions.

The Higher the Marginal Propensity to Consume,the