Question

What happens if there is a rise in the marginal propensity to consume (MPC)​

Answer 1

Answer:

The higher the MPC, the higher the multiplier—the more the increase in consumption from the increase in investment; so, if economists can estimate the MPC, then they can use it to estimate the total impact of a prospective increase in incomes.

Answer 2

Answer:

MPC : Marginal propensity to consume:

• The higher the MPC, the higher the multiplier : the more the increase in consumption from the increase in investment.
• So, if economists can estimate the MPC, then they can use it to estimate the total impact of a prospective increase in incomes.