An increase in the value of the multiplier can be caused by
A) an increase in the marginal propensity to import.
B) an increase in autonomous consumption expenditure.
C) a decrease in the marginal propensity to consume.
D) an increase in the marginal propensity to consume.

Question

Quizplus · Accepted Answer

An increase in the marginal propensity to consume leads to a higher multiplier effect because a higher percentage of each additional dollar earned is spent, increasing the overall impact on the economy. An increase in the other factors listed would decrease the multiplier.

An Increase in the Value of the Multiplier Can Be