Topic 10- the Multiplier Effect

Question 0

Example of the multiplier

-roads

Answer 0

Gov increase expenditure by increasing its road building programme>generate incomes for households e.g creates more jobs to build road

Question 1

The multiplier

Answer 1

A rise in investment or government spending will eventually trigger a large rise in overall GDP than the initial increase in spending

Shows the amount by which a change in an injection or leakage causes total spending to Change
It is a result of income being re-spent in the economy causing second round effects