how is the multiplier effect related to mpc 
the magnitude of the multiplier is directly related to the marginal propensity to consume mpc which is defined as the proportion of an increase in income that gets spent on consumption for example if consumers save 20 of new income and spend the rest then their mpc would be 0 8 1 0 2 the multiplier would be 1 1 0 8 5 so every new dollar creates extra spending of 5 essentially spending from one consumer becomes income for a business that then spends on equipment worker wages energy materials purchased services taxes and investor returns when a worker from that business spends their income it perpetuates the cycle 