Relationship between Investment multiplier and Marginal propensity to consume

There is a direct relationship between multiplier and MPC. Higher the value of MPC, higher the multiplier affect and lower is the value of multiplier, lower the multiplier effect. 

We have already derived the multiplier formula i.e 

K = 1 / 1-MPC

Now we see the multiplier effect by taking different values of MPC

If MPC = 0.5 

K = 1 / 1-MPC

K = 1 / 1-0.5

    = 1 / 0.5

    = 2
If MPC = 0.8 (increase the value of MPC) 

K = 1 / 1-MPC

K = 1 / 1-0.8

    = 1 / 0.2

    = 5

Increase in MPC implies increase in the value of multiplier

         

If MPC = 0.2 (decrease the value of MPC) 

K = 1 / 1-MPC

K = 1 / 1-0.2

    = 1 / 0.8

    = 1.25

Decrease in MPC implies decrease in the value of multiplier.