The larger is the marginal propensity to consume (MPC)
A)the larger is the multiplier.
B)the smaller is the multiplier.
C)the smaller is the slope of the consumption function.
D)the larger is the slope of the saving function.

Question

Quizplus · Accepted Answer

The larger the MPC, the more of each additional dollar of income will be spent on consumption. As a result, changes in income will have a larger overall impact on consumption, leading to a larger multiplier effect. Therefore, choice A is the best answer.

The Larger Is the Marginal Propensity to Consume (MPC)