The multiplier effect occurs when:

Question

Quizplus · Accepted Answer

The multiplier effect occurs when money spent by tourists in the local economy is recycled back into the community through the purchase of goods and services from local businesses. This creates a ripple effect, as local businesses are able to hire more employees and purchase more goods and services from other local businesses, leading to increased economic activity in the community. Options A and B are not correct as they refer to specific situations rather than the general concept of the multiplier effect. Option C is also incorrect as employment rates reaching normal levels is not necessarily indicative of the multiplier effect.

The Multiplier Effect Occurs When