The idea that new spending creates more new spending is known as the _____ effect.
A) crowding-out
B) multiplier
C) wealth
D) interest rate

Question

Quizplus · Accepted Answer

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