Sterling Terrell

smart ideas from books

  • Home
  • About
    • Work With Me
    • My CV
    • Tools
    • Books
    • Series
  • Newsletter
  • Advertising
You are here: Home / Potpourri / Economics 101: Multiplier Effect

Economics 101: Multiplier Effect

Economics 101: Multiplier Effect

[This is part of the series: The Complete Guide To Economics 101.]

What is the multiplier effect?

The Multiplier Effect is the impact that initial changes in spending will have in the economy.

For instance, an initial decrease in price levels is multiplied from its original impact.

  • Price levels decrease at home
  • So people buy more goods and services – because our money goes further
  • Home firms increase output in response to increased demand
  • This also makes goods here cheaper for foreigners
  • So foreigners buy more goods from us
  • Home firms AGAIN increase output in response to increased demand

This “AGAIN” response is the multiplier effect.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on Tumblr (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Pocket (Opens in new window)
  • Click to share on WhatsApp (Opens in new window)

Related

Filed Under: PotpourriTagged With: #Economics101

Privacy & Cookies: This site uses cookies. By continuing to use this website, you agree to their use.
To find out more, including how to control cookies, see here: Privacy Policy

Connect

  • Facebook
  • LinkedIn
  • Pinterest
  • Twitter

Free Weekly Newsletter:

Search

Recent Posts

  • This Is Demanding And Exhausting
  • Instabooks 345
  • A Tiny Little Robot
  • Can Parents Cut You With A Glance?
  • Devs Watching QA Test Their Code Looks Like This
  • With Time Best Spent Exploring
  • The Week In Review – 250
  • Random Thoughts – 274
  • Affirm The Rightness Of Your Kids?
  • Describe Your Parental Praise?
  • $100,000,000 A Year On YouTube
  • Sugar Is What Is Hard To Kick
  • Denying Your Children Important Experiences (Stop!)
  • The Case For Less Praise
  • Create This Controversy
  • When A Child Asks A Question (Do This)
  • Hypomone – In All Things
  • With No Care Of The Nations
  • Instabooks 344
  • The Week In Review – 249
  • Maybe Stop Asking Your Kids “Did You Have Fun Today?”
  • Random Thoughts – 273
  • The Bittersweet Road Of Parenting
  • Instabooks 343
  • Waiting For That Long Black Train

Copyright © 2021 · Generate Pro On Genesis Framework · WordPress · Log in