If the expenditure line is steeper, the Keynesian multiplier will be larger.

Name: If the expenditure line is steeper, the Keynesian multiplier will be larger.
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Question

Quizplus · Accepted Answer

The steeper the expenditure line, the larger the slope or the marginal propensity to consume (MPC). According to the formula for calculating the Keynesian multiplier (K = 1 / (1-MPC)), a larger MPC (or steeper expenditure line) leads to a larger multiplier. Therefore, the statement is true.

If the Expenditure Line Is Steeper, the Keynesian Multiplier Will