The idea that new spending creates more new spending is known as:

Question

Quizplus · Accepted Answer

The multiplier effect suggests that new spending creates more new spending through a chain reaction of increased economic activity. This happens as the recipients of the initial spending use their increased income to make their own purchases and investments. The crowding-out effect refers to the idea that government spending can crowd-out private sector investment, while the wealth effect suggests that changes in consumer wealth impact spending. The interest rate effect refers to the impact of changes in interest rates on consumer and business spending. However, the best choice for this question is the multiplier effect.

The Idea That New Spending Creates More New Spending Is