The higher the MPS, _____________.a. Lower is the multiplier. b. Higher is the investment spending. c. Higher is the equilibrium income. d. Higher is the multiplier.

Step 1: Understand the question.
The question is asking about the relationship between the MPS (Marginal Propensity to Save) and certain variables.

Step 2: Identify the options.
The options provided are:
a. Lower is the multiplier.
b. Higher is the investment spending.
c. Higher is the equilibrium income.
d. Higher is the multiplier.

Step 3: Analyze the relationship between the MPS and the options.
To determine the correct answer, we need to understand the relationship between the MPS and each option.

Option a: Lower is the multiplier.
The multiplier is a measure of how much a change in spending or investment affects the overall income or output in an economy. If the MPS is higher, it means that people are saving more and spending less. This would result in a lower multiplier, as there is less spending and investment to multiply.

Option b: Higher is the investment spending.
Investment spending refers to the amount of money businesses and individuals spend on capital goods, such as machinery or equipment. The MPS represents the portion of income that is saved rather than spent. If the MPS is higher, it means that people are saving more and spending less. This would result in lower investment spending, as there is less money available for businesses and individuals to invest.

Option c: Higher is the equilibrium income.
Equilibrium income refers to the level of income in an economy where aggregate demand equals aggregate supply. The MPS represents the portion of income that is saved rather than spent. If the MPS is higher, it means that people are saving more and spending less. This would result in a lower equilibrium income, as there is less spending in the economy.

Option d: Higher is the multiplier.
The multiplier is a measure of how much a change in spending or investment affects the overall income or output in an economy. If the MPS is higher, it means that people are saving more and spending less. This would result in a higher multiplier, as there is less spending and investment to multiply.

Step 4: Determine the correct answer.
Based on the analysis above, the correct answer is:
a. Lower is the multiplier.

Step 5: Provide the answer.
The higher the MPS, lower is the multiplier.

Question

The higher the MPS, _____________.a. Lower is the multiplier. b. Higher is the investment spending. c. Higher is the equilibrium income. d. Higher is the multiplier.

Step 1: Understand the question.
The question is asking about the relationship between the MPS (Marginal Propensity to Save) and certain variables.

Step 2: Identify the options.
The options provided are:
a. Lower is the multiplier.
b. Higher is the investment spending.
c. Higher is the equilibrium income.
d. Higher is the multiplier.

Step 3: Analyze the relationship between the MPS and the options.
To determine the correct answer, we need to understand the relationship between the MPS and each option.

Option a: Lower is the multiplier.
The multiplier is a measure of how much a change in spending or investment affects the overall income or output in an economy. If the MPS is higher, it means that people are saving more and spending less. This would result in a lower multiplier, as there is less spending and investment to multiply.

Option b: Higher is the investment spending.
Investment spending refers to the amount of money businesses and individuals spend on capital goods, such as machinery or equipment. The MPS represents the portion of income that is saved rather than spent. If the MPS is higher, it means that people are saving more and spending less. This would result in lower investment spending, as there is less money available for businesses and individuals to invest.

Option c: Higher is the equilibrium income.
Equilibrium income refers to the level of income in an economy where aggregate demand equals aggregate supply. The MPS represents the portion of income that is saved rather than spent. If the MPS is higher, it means that people are saving more and spending less. This would result in a lower equilibrium income, as there is less spending in the economy.

Option d: Higher is the multiplier.
The multiplier is a measure of how much a change in spending or investment affects the overall income or output in an economy. If the MPS is higher, it means that people are saving more and spending less. This would result in a higher multiplier, as there is less spending and investment to multiply.

Step 4: Determine the correct answer.
Based on the analysis above, the correct answer is:
a. Lower is the multiplier.

Step 5: Provide the answer.
The higher the MPS, lower is the multiplier.

Knowee AI · Accepted Answer