Application 5.3, "Ripples through the Economy,"illustrates in part how:
A) the multiplier effect causes unemployment in one industry to spread to other industries.
B) something like a large convention or sporting event in a city tends not to have a multiplier effect because it lasts just a few days.
C) unemployment in the steel and automobile industries made it easier for steel and auto workers to find higher paying jobs in other industries.
D) the snowball effect of the multiplier does not apply to the automobile industry.

Question

Quizplus · Accepted Answer

The multiplier effect explains how unemployment in one industry can lead to job losses in other industries due to decreased spending by the unemployed workers, thereby causing a ripple effect through the economy.