If the Marginal Propensity to Save (MPS)decreases, the Multiplier

question 172

Multiple Choice

If the marginal propensity to save (MPS) decreases, the multiplier

• A) increases.
• B) decreases.
• C) stays the same.
• D) can either increase or decrease, depending on what happens to the marginal propensity to consume (MPC).

Understand the components of WACC and their role in capital budgeting decisions.

Develop an understanding of strategies to minimize the cost of new capital, including preferred equity and retained earnings.

Distinguish between the cost of new equity and the cost of retained earnings and their impact on WACC.

Assess the impact of capital structure decisions on a firm's financial policies and cost of capital.