question part 2 of 2 the greater the value of the marginal propensity to consume a. the smaller the value of…

question part 2 of 2 the greater the value of the marginal propensity to consume a. the smaller the value of the multiplier. b. the greater the value of the marginal propensity to save. c. the greater the value of autonomous consumption. d. the greater the value of the multiplier. the greater the value of the marginal propensity to save a. the smaller the value of the multiplier. b. the greater the value of the multiplier. c. the greater the value of the marginal propensity to consume. d. the greater the value of autonomous consumption.

question part 2 of 2 the greater the value of the marginal propensity to consume a. the smaller the value of the multiplier. b. the greater the value of the marginal propensity to save. c. the greater the value of autonomous consumption. d. the greater the value of the multiplier. the greater the value of the marginal propensity to save a. the smaller the value of the multiplier. b. the greater the value of the multiplier. c. the greater the value of the marginal propensity to consume. d. the greater the value of autonomous consumption.

Answer

Brief Explanations:

The multiplier formula is $\frac{1}{1 - MPC}$ where $MPC$ is the marginal - propensity to consume. As $MPC$ increases, the denominator $1 - MPC$ decreases, so the value of the multiplier increases. Also, since $MPC+MPS = 1$ (where $MPS$ is the marginal - propensity to save), as $MPS$ increases, the denominator of the multiplier formula $1 - MPC = MPS$ increases, and the value of the multiplier $\frac{1}{MPS}$ decreases.

Answer:

  1. D. the greater the value of the multiplier.
  2. A. the smaller the value of the multiplier.