<P> MPC's importance depends on the multiplier theory . MPC determines the value of the multiplier . The higher the MPC, the higher the multiplier and vice versa . The relationship between the multiplier and the propensity to consume is as follows: </P> <Dl> <Dd> Y = C + I (\ displaystyle Y = C + I) </Dd> <Dd> Δ Y = Δ C + Δ I (\ displaystyle \ Delta Y = \ Delta C+ \ Delta I) </Dd> <Dd> Δ Y = c Δ Y + Δ I (\ displaystyle \ Delta Y = c \ Delta Y+ \ Delta I) (where c (\ displaystyle c) is M P C (\ displaystyle (\ mathit (MPC)))) </Dd> <Dd> Δ Y − c Δ Y = Δ I (\ displaystyle \ Delta Y-c \ Delta Y = \ Delta I) </Dd> <Dd> Δ Y (1 − c) = Δ I (\ displaystyle \ Delta Y (1 - c) = \ Delta I) </Dd> <Dd> Δ Y = Δ I (1 − c) (\ displaystyle \ Delta Y = (\ frac (\ Delta I) ((1 - c)))) </Dd> <Dd> Δ Y Δ I = 1 (1 − c) (\ displaystyle (\ frac (\ Delta Y) (\ Delta I)) = (\ frac (1) ((1 - c)))) </Dd> <Dd> K = 1 (1 − c) (\ displaystyle K = (\ frac (1) ((1 - c)))) (where, K (\ displaystyle K) is multiplier and K = Δ Y Δ I) (\ displaystyle K = (\ frac (\ Delta Y) (\ Delta I)))) </Dd> </Dl> <Dd> Y = C + I (\ displaystyle Y = C + I) </Dd> <Dd> Δ Y = Δ C + Δ I (\ displaystyle \ Delta Y = \ Delta C+ \ Delta I) </Dd>

Mathematically the average propensity to consume and the average propensity to save together equal