Discussion
A major portion of the multiplier effect is realized in fewer periods when marginal propensity to consume is
Answer: C
The multiplier is realised in fewer periods when the marginal propensity to consume is smaller. With a small MPC, each round of spending is a small fraction of the last, so the sequence of respending dies out quickly and most of the total effect is reached in the first few periods.
With an MPC of unity or a large MPC, each round is nearly as big as the last, so the effect takes many periods to be realised. The option 'none of the above' is therefore wrong.
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