An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. For example, if a corporation builds a factory, it will employ construction workers and their suppliers as well as those who work in the factory.

What is meant by the multiplier effect?

The multiplier effect refers to the proportional amount of increase, or decrease, in final income that results from an injection, or withdrawal, of spending.

How do you use multiplier effect in a sentence?

We know that construction has a multiplier effect on the economy. The multiplier effect of this investment is even more impressive than these figures suggest. Moreover, carmaking has a high multiplier effect on supply-chain jobs. Public investment has a multiplier effect on private investment.