Spending multiplier
Imagine you have $1 and you decide to spend it at the store. The store owner then takes your dollar and spends it on something else, like buying new inventory for the store. The person who sold the inventory then uses that money to buy something else and this process goes on and on.
This idea is called the spending multiplier, and it means that when you spend money, that money doesn't just disappear. It goes out into the economy and helps create more economic activity.
For example, if every time you spend $1, it creates $5 of economic activity, that means your spending multiplier is 5x. This happens because when you spend money, that money goes to someone else, who then spends it, and so on.
The spending multiplier can have a big impact on the economy because it means that when people spend money, it creates more economic activity and helps to stimulate growth.
This idea is called the spending multiplier, and it means that when you spend money, that money doesn't just disappear. It goes out into the economy and helps create more economic activity.
For example, if every time you spend $1, it creates $5 of economic activity, that means your spending multiplier is 5x. This happens because when you spend money, that money goes to someone else, who then spends it, and so on.
The spending multiplier can have a big impact on the economy because it means that when people spend money, it creates more economic activity and helps to stimulate growth.
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