Spending multiplier: Difference between revisions

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In [[economics]], the spending [[multiplier effect]] describes a process by which an initial increase  of one economic aggregate is amplified and provokes an increase in the same or/and other aggregate(s) larger than the initial raise. The idea is that the raise of a first agent income improves the situation of a second agent by the way of consumption, and so on. 
The economic [[multiplier effect]] occurs when an increase  in one component of national income provokes a succession of other  increases, with a cumulative effect that exceeds the initial stimulus.
 
The spending multiplier is a key concept in [[Keynesian economics]] for it explains how the government purchases can have a strong stimulating effect on the national output, depending on the marginal propensity to consume.

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The economic multiplier effect occurs when an increase in one component of national income provokes a succession of other increases, with a cumulative effect that exceeds the initial stimulus.

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