Which of the following best characterizes the relationship between the marginal propensity to consume and the multiplier?
A) The lower the MPC, the higher the multiplier.
B) The higher the MPC, the lower the multiplier.
C) The MPC equals the multiplier.
D) The lower the MPC, the lower the multiplier.

Question

Which of the following best characterizes the relationship between the marginal propensity to consume and the multiplier?  
A) The lower the MPC, the higher the multiplier. 
B) The higher the MPC, the lower the multiplier. 
C) The MPC equals the multiplier. 
D) The lower the MPC, the lower the multiplier.

Quizplus · Accepted Answer

The multiplier is inversely related to the marginal propensity to save (MPS), which is 1 - MPC. Therefore, a lower MPC means a higher MPS, leading to a lower multiplier.

Which of the Following Best Characterizes the Relationship Between the Marginal