What is the effect of an increase in the marginal propensity to consume (MPC) on the multiplier?

Show Answers

It increases the multiplier's magnitudeIt does not affect the multiplier at allIt seldom happens since the MPC is determined by lawIt decreases the size of the multiplierIt causes the multiplier to become unstable

Explanation

An increase in the marginal propensity to consume leads to a higher multiplier because consumers spend a larger portion of additional income, amplifying the overall economic impact.