The larger the marginal propensity to consume
A)the larger the marginal propensity to save is.
B)the larger the multiplier is.
C)the smaller the multiplier is.
D)the smaller autonomous consumption is.

Question

Quizplus · Accepted Answer

The larger the marginal propensity to consume, the larger the multiplier is. This is because for every additional dollar of income, individuals are more likely to spend a larger fraction of it on consumption, thereby increasing overall spending in the economy. This leads to a larger increase in GDP, resulting in a larger multiplier effect.

The Larger the Marginal Propensity to Consume