What is the economic effect whereby an increase in spending (for example, of funds provided to a country by a donor)produces an increase in national income and consumption greater than the initial amount spent called?
A)The untied aid effect
B)The multiplier effect
C)The export-led growth effect
D)The network effect

Question

Quizplus · Accepted Answer

The multiplier effect describes how an initial increase in spending leads to an increase in national income and consumption greater than the initial amount spent. This concept is often used to explain how government spending or investment can lead to a larger increase in overall economic activity.

What Is the Economic Effect Whereby an Increase in Spending