If the marginal propensity of consume is greater than marginal propensity to save, the value of the multiplier will be (Choose the correct alternative):

greater than 2

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less than 2

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equal to 2

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equal to 5

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Solution

The correct option is A greater than 2
If the value of MPC IS greater than MPS, then the value of the multiplier is always more than two because the change in savings or investment will always be less than half the change in income.

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