The multiplier effect occurs when a change in government spending raises the incomes of people,who in turn increase their spending.

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The multiplier effect is a real economic concept that suggests that an increase in government spending can lead to an even larger increase in economic output. This occurs because the initial increase in spending raises the incomes of people, who then use that additional income to increase their own spending. As a result, the effect "multiplies" as it passes through the economy, leading to greater overall economic growth.

The Multiplier Effect Occurs When a Change in Government Spending