The economic impact of the multiplier is ____, and then becomes ____.

Question

Quizplus · Accepted Answer

The economic impact of the multiplier is large initially, as it causes an increase in spending and income. However, as the effects of the multiplier ripple through the economy, the impact becomes smaller. This is because some of the initial spending leaks out of the economy through imports, taxes, and savings. Thus, while the overall impact of the multiplier is positive, it becomes smaller over time.

The Economic Impact of the Multiplier Is ____, and Then