Keynesian multiplier

The Keynesian Multiplier is an economic concept that explains how an initial increase in spending leads to further increases in income and consumption throughout the economy. For instance, if the government invests in a new road, construction workers earn wages, which they then spend on goods and services. This spending creates income for others, who in turn spend more. The multiplier effect means that the overall impact on the economy is greater than the initial spending. Essentially, it highlights how money circulated creates greater economic activity and can help stimulate growth during downturns.