The numerical value of the multiplier will be smaller the

Question

Multiple Choice
larger the average propensity to consume.
larger the slope of the saving schedule.
larger the slope of the consumption schedule.
smaller the slope of the saving schedule.

Answer 1

The correct answer is:

larger the average propensity to consume.

This is because the multiplier effect is inversely related to the average propensity to consume (APC). A larger APC implies that a larger portion of income is being consumed rather than saved, which can reduce the potential for the multiplier effect to increase overall economic output. Thus, a larger average propensity to consume will result in a smaller multiplier.