what-are-the-implications-of-a-high-marginal-propensity-to-consume-mpc-on-the-mu

Question

What are the implications of a high marginal propensity to consume (MPC) on the multiplier effect?

Accepted Answer

A high MPC results in a larger multiplier, amplifying the impact of spending changes.

Answer

A low MPC results in a larger multiplier.

Answer

A high MPC results in a smaller multiplier, reducing the impact of spending changes.

Answer

The MPC has no effect on the size of the multiplier.