The extent of the multiplier effect in increasing domestic business activity is dependent upon the marginal propensity to consume and marginal propensity to import.
Investment, in its turn, depends upon consumption, and consumption depends upon the marginal propensity to consume (savings rate) across all income categories.
But if additional income goes into the hands of those with a lower marginal propensity to consume then the multiplier on consumption demand will be relatively weaker.
This idea came to replace the perception that people had a marginal propensity to consume and therefore current consumption was tied to current income.
It could not explain the fact that the long-run average propensity to consume seemed to be roughly constant despite the marginal propensity to consume being much lower.
And low-wage workers are less likely to participate in retirement savings plans even when they have access to them in light of their higher marginal propensity to consume.
That is, the marginal propensity to consume (mpc) is less than one, so that each round some extra income goes into saving, leaking out of the cumulative process.