Question

As the marginal propensity to consume (MPC) increases, the multiplier:

a) Decreases
b) Remains unchanged
c) Increases
d) Becomes negative

Answer 1

As the marginal propensity to consume (MPC) increases, the multiplier increases.

Step-by-step explanation:

The multiplier in economics refers to how many times a dollar will turnover in the economy, based on the Marginal Propensity to Consume (MPC). As the MPC increases, the multiplier also increases. This means that a higher percentage of each additional dollar received will be spent, leading to a greater increase in overall consumption and economic activity.