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Inequality and the marginal propensity to consume

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According to the study by Chris Carroll et al cited in article #17a by Nick Bunker ("Wealth Inequality and the Marginal Propensity to Consume") middle-income families have a larger mpc than do wealth families. In which case below would the multiplier be larger? Explain why.

• (Today) When the wealthy owners of consumer goods companies are paid 300 times as much as the typical worker in their companies, as is true today, or

• (50 years ago) When the wealthy owners of consumer goods companies are paid 20 times as much as the typical worker in their companies, as was true fifty years ago

Reference no: EM131263132

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