Multipliers will be lower with which one of the following?
High marginal propensity to consume
Low marginal propensity to consume
High marginal propensity to invest
Low marginal propensity to save
Answer is Wrong!
Answer is Right!
This question was previously asked in
UPSC CAPF – 2018
– If MPC is high, (1 – MPC) is low, and the multiplier (1 / (1 – MPC)) is high.
– If MPC is low, (1 – MPC) is high, and the multiplier (1 / (1 – MPC)) is low.
Therefore, multipliers will be lower with a low marginal propensity to consume.