Local multiplier effect

Local multiplier effect means that when money is spent in a local area it helps the local economy more than spending the same money elsewhere. For example, if a tourist buys food from a restaurant in town, that money goes to the restaurant, who then pays its employees, which helps them buy things from other shops in town. This money then goes to those other shops and employees, which helps them buy things from yet other places, and so on. This helps the whole town.