Spending multiplier ↑ when MPC ↑ because:

When people save more, the marginal propensity to consume (MPC) decreases. A higher saving rate means that less of each additional dollar earned is spent, which diminishes the multiplier effect. Therefore, an increase in savings does not contribute to a larger spending multiplier; rather, it reduces the overall consumption in the economy.

While saving less may suggest that more income is being spent, this alone does not explain the relationship with the spending multiplier. The spending multiplier specifically reflects changes in the MPC. If people save less but still maintain a low MPC, the multiplier may not significantly increase. The focus should be on the proportion of income spent rather than just the saving behavior.

This statement reflects the mathematical relationship between the marginal propensity to save (MPS) and the marginal propensity to consume (MPC), but it does not address the question regarding the spending multiplier. While it is true that MPS is equal to 1 minus MPC, this equation does not elucidate how changes in MPC affect the multiplier effect in practical terms.