If autonomous consumption increases, the size of the multiplier would
A) increase.
B) decrease.
C) remain constant.
D) either increase or decrease depending on the size of the change in autonomous consumption.

Question

Quizplus · Accepted Answer

The size of the multiplier is determined by the marginal propensity to consume and not by the level of autonomous consumption. Therefore, an increase in autonomous consumption does not affect the size of the multiplier.

If Autonomous Consumption Increases, the Size of the Multiplier Would