The investment multiplier is:
A) negatively related to the MPS.
B) positively related to the MPC.
C) negatively related to the MPZ.
D) all of the above

Question

Quizplus · Accepted Answer

The investment multiplier is positively related to the marginal propensity to consume (MPC) and negatively related to the marginal propensity to save (MPS), which is essentially the same as being negatively related to the marginal propensity to zilch (MPZ), as MPZ can be considered as not spending or saving in the economy. Therefore, all of the options are correct descriptions of the relationship of the investment multiplier.

The Investment Multiplier Is