If the marginal propensity to save (MPS)increases, the multiplier
A)decreases.
B)increases.
C)stays the same.
D)can either increase or decrease, depending on what happens to the marginal propensity to consume (MPC).

Question

Quizplus · Accepted Answer

The marginal propensity to save (MPS) measures the proportion of an increase in income that people save rather than spend. If the MPS increases, people will save a larger portion of their income, leaving a smaller portion available for spending. This means that the multiplier effect will be smaller, decreasing the overall increase in GDP. Therefore, the correct answer is A.

If the Marginal Propensity to Save (MPS)increases, the Multiplier