Live revision! Join us for our free exam revision livestreams Watch now


Multiplier Effect

The multiplier effect occurs when an initial injection into the circular flowcauses a bigger final increase in real national income. This injection of demand might come for example from a rise in exports, investment or government spending.

The size of the multiplier coefficient is affected by the marginal rate of withdrawal / leakage from the circular flow of income.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.