The larger the MPC,

Question

The larger the MPC,

Quizplus · Accepted Answer

The MPC (Marginal Propensity to Consume) represents the additional amount of consumption that results from a unit increase in income. The larger the MPC, the more likely people are to spend additional income, and the larger the multiplier effect will be. The multiplier effect is the ratio of the change in income to the initial change in autonomous spending, and it measures how much the economy will grow as a result of an increase in spending. Therefore, a larger MPC leads to a larger multiplier effect, which means that a small increase in autonomous spending will lead to a larger increase in income and output.

The Larger the MPC