The size of the multiplier depends on
A) the level of autonomous investment.
B) the marginal propensity to consume.
C) the level of net exports.
D) the level of autonomous consumption.

Question

Quizplus · Accepted Answer

The multiplier is determined by the marginal propensity to consume (MPC). The MPC is the fraction of additional disposable income that is spent, and therefore the higher the MPC, the larger the multiplier. The other choices (A, C, and D) may impact the level of output in the short run, but they do not directly determine the size of the multiplier.

The Size of the Multiplier Depends on