Multiplier (economics)

Multipliers in economics are important tools for understanding how spending in an economy affects economic growth. Basically, a multiplier is a number that shows how much economic activity is created by a certain amount of money spent in a particular area. For example, if someone spends $1 on food, it might generate $2 in economic activity because the store needs to buy more food from the supplier, and the supplier needs to buy more from farmers or distributors, and so on. The multiplier helps us understand how one dollar of spending can have a much bigger impact on the economy.