question archive The multiplier will increase if the marginal propensity to consume _____ or the marginal tax rate _____
The multiplier will increase if the marginal propensity to consume _____ or the marginal tax rate _____
Subject:EconomicsPrice:2.88 Bought3
The multiplier will increase if the marginal propensity to consume _____ or the marginal tax rate _____.
a. increases, increases
b. decreases, decreases
c. increases, decreases
d. decreases, increases
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer: C
The multiplier increases when the amount of money an individual spends on consumption from a $1 increase income rises. There are two ways this can happen. The first is that the marginal tax rate decreases which means the individual gets to keep more of his money and thus will spend more on consumption. The second is that the individual simply spends more on consumption as a percent of their disposal income meaning the marginal propensity to consume increases.
