The larger the MPC,the greater the multiplier effect.

Name: The larger the MPC,the greater the multiplier effect.
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Quizplus · Accepted Answer

The multiplier effect is the concept that an initial increase in spending leads to a larger final increase in GDP. The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. Therefore, the larger the MPC, the smaller the denominator in the multiplier formula and the greater the overall multiplier effect.

The Larger the MPC,the Greater the Multiplier Effect