Increases in the marginal propensity to consume,other things constant,
A)increase the value of the multiplier
B)decrease the value of the multiplier
C)never change the value of the multiplier
D)shift the aggregate expenditure curve downward
E)cause a downward movement along an aggregate expenditure curve

Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. As the MPC increases, the denominator in this equation decreases, resulting in an increase in the overall value of the multiplier.

Increases in the Marginal Propensity to Consume,other Things Constant