why-does-a-lower-marginal-propensity-to-consume-mpc-result-in-a-smaller-multipli

Question

Why does a lower marginal propensity to consume (MPC) result in a smaller multiplier effect?

Accepted Answer

Because less of the additional income is spent, leading to smaller increases in consumption.

Answer

Because it has no impact on the multiplier effect.

Answer

Because it reverses the direction of the multiplier effect.

Answer

Because more of the additional income is spent, leading to larger increases in consumption.