As the MPC gets close to 1, what does the value of the multiplier approach?
A) 0
B) 1
C) 10
D) infinity

Question

Quizplus · Accepted Answer

As the MPC (marginal propensity to consume) gets close to 1, the value of the multiplier approaches infinity. This is because as people consume more, it leads to an increase in aggregate demand, which leads to producers increasing production, which leads to further increases in income and consumption. This cycle continues and leads to a large increase in overall spending and GDP.

As the MPC Gets Close to 1, What Does the Value