ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -This is called the expenditure multiplier effect: an initial increase in spending, cycles repeatedly through the economy and has a larger impact than the initial dollar amount spent.

Detailed explanation-2: -The multiplier effect refers to the effect on national income and product of an exogenous increase in demand. For example, suppose that investment demand increases by one. Firms then produce to meet this demand. That the national product has increased means that the national income has increased.

Detailed explanation-3: -A multiplier is simply a factor that amplifies or increase the base value of something else. A multiplier of 2x, for instance, would double the base figure. A multiplier of 0.5x, on the other hand, would actually reduce the base figure by half. Many different multipliers exist in finance and economics.

Detailed explanation-4: -The multiplier effect refers to the theory that government spending intended to stimulate the economy causes increases in private spending that additionally stimulates the economy. In essence, the theory is that government spending gives households additional income, which leads to increased consumer spending.

Detailed explanation-5: -Multiplier and Accelerator Multiplier reflects how a change in investment affect income and employment while accelerator reflects how a change in production and consumption affect investment. Both economic concepts seek to show the connection or interaction between investments and production/consumption.