Question

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Explain the relationship between multiplier and MPC.​

Answer 1

Answer:

The multiplier effect is the magnified increase in equilibrium GDP that occurs when any component of aggregate expenditures changes. The greater the MPC (the smaller the MPS), the greater the multiplier. MPS = 0, multiplier = infinity; MPS = . 4, multiplier = 2.5; MPS = .

Answer 2

Answer:

Multipler refers to the increment amount of income due to increase in the investment in an economy .MPC refers to the increment amount of consumption from an unit increase the income of person /economy of whole