b What conditions would be consistent with a large multiplie

(b) What conditions would be consistent with a large multiplier?

Solution

Multiplier is the change in national income due to change in aggregate expenditure

And in a four sector open economy multiplier=1/1-c+ct+m

And in a two secto economy multiplier=1/1-MPC=1/MPS

Thus higher the MPC higher will be the multiplier and lower will be the mps.