As the Marginal Propensity to Consume (MPC) Increases, the Spending

question 75

Multiple Choice

As the marginal propensity to consume (MPC) increases, the spending multiplier:

• A) increases.
• B) decreases.
• C) remains constant.
• D) becomes undefinable.

---

Definitions:

Free-rider Problem

A situation where individuals benefit from resources or services without paying for their use, leading to under-provision or depletion of resources.

Nonrival Goods

Goods whose consumption by one individual does not reduce availability to others, such as public parks or broadcast television.

Pay-per-view Television

A type of television service by which subscribers can purchase events to view via private telecast.

Free-rider Problem

The free-rider problem occurs when individuals benefit from resources, goods, or services without paying for them, leading to underprovision of those goods or services.