Assume there is a multiplier effect, some crowding out and no other effects.

38. Assume there is a multiplier effect, some crowding out and no other effects. An increase in government expenditures changes aggregate demand more,

1. the smaller the MPC and the stronger the influence of income on money demand.
2. the smaller the MPC and the weaker the influence of income on money demand.
3. the larger the MPC and the stronger the influence of income on money demand.
4. the larger the MPC and the weaker the influence of income on money demand.
5. None of the above.

Answer: D

Explain why