The idea that new spending creates more new spending is known as the _____ effect.

Name: The idea that new spending creates more new spending is known as the _____ effect.
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Question

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The multiplier effect refers to the idea that an increase in spending will lead to a larger increase in economic activity. As new spending creates new income, which in turn leads to more spending, this creates a multiplier effect on the overall economy.

The Idea That New Spending Creates More New Spending Is