The increase in income which results from an increase in investment spending would be greater the:
A)smaller the MPS.
B)smaller the APC.
C)larger the MPS.
D)smaller the MPC.

Question

Quizplus · Accepted Answer

A smaller Marginal Propensity to Save (MPS) means a larger Marginal Propensity to Consume (MPC), leading to a larger multiplier effect and thus a greater increase in income from investment spending.

The Increase in Income Which Results from an Increase in Investment