Samuelson's Multiplier

Samuelson’s Multiplier explains how an initial change in spending can lead to a larger overall impact on the economy. When someone, like the government or a business, invests or spends money, it creates income for others, who then also spend part of it, generating more income for even more people. This cycle continues, amplifying the original amount. Essentially, the multiplier measures how much total economic activity increases from an initial dollar of spending, highlighting the interconnectedness of income, consumption, and spending in an economy.