Economics · Keynesian Economics

If the marginal propensity to save (MPS) increases from 0.2 to 0.4, the value of the multiplier will:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Remain unchanged
2Increase from 5 to 2.5
3Decrease from 5 to 2.5✓
4Increase from 2.5 to 5

Correct answer

Decrease from 5 to 2.5

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If the marginal propensity to save (MPS) increases from 0.2 to 0.4, the value of the multiplier will:

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If the marginal propensity to save (MPS) increases from 0.2 to 0.4, the value of the multiplier will:

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