Investment Multiplier

Investment Multiplier

The term investment multiplier refers to the concept that any increase in public or private investment spending has a more than proportionate positive impact on aggregate income and the general economy. The multiplier attempts to quantify the additional effects of a policy beyond those that are immediately measurable.

The investment multiplier tries to determine the financial impact for a public or private project. For instance, extra government spending on roads can increase the incomes of construction workers as well as that of the suppliers of the materials necessary for the project. These people may in turn spend some of the this extra income in the retail sector, thereby boosting incomes of workers there as well.

Investment dictionary. . 2012.

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  • multiplier — The investment multiplier which quantifies the overall effects of investment spending on total income. The deposit multiplier which shows the effects of a change in bank deposits on the total amount of outstanding credit and the money supply.… …   Financial and business terms

  • multiplier — /mul teuh pluy euhr/, n. 1. a person or thing that multiplies. 2. Arith. a number by which another is multiplied. 3. Physics. a device for intensifying some effect. [1425 75; late ME; see MULTIPLY, ER1] * * * In economics, a numerical coefficient …   Universalium

  • Multiplier (economics) — In economics, a multiplier is a factor of proportionality that measures how much an endogenous variable changes in response to a change in some exogenous variable. For example, suppose a one unit change in some variable x causes another variable… …   Wikipedia

  • Multiplier uncertainty — In macroeconomics, multiplier uncertainty is lack of perfect knowledge of the multiplier effect of a particular policy action, such as a monetary or fiscal policy change, upon the intended target of the policy. For example, a fiscal policy maker… …   Wikipedia

  • Multiplier — In Keynesian economic theory, a factor that quantifies the change in total income as compared to the injection of capital deposits or investments which originally fueled the growth. It is usually used as a measurement of the effects of government …   Investment dictionary

  • multiplier — noun 1》 a quantity by which a given number (the multiplicand) is to be multiplied. 2》 Economics a factor by which an increment of income exceeds the resulting increment of saving or investment. 3》 a device for increasing by repetition the… …   English new terms dictionary

  • multiplier — /ˈmʌltəplaɪə / (say multuhpluyuh) noun 1. someone or something that multiplies. 2. Mathematics the number by which another is to be multiplied. 3. Physics a device for intensifying some phenomenon. 4. an indicator of the relative sizes of a given …   Australian English dictionary

  • multiplier effect — /ˈmʌltəplaɪər əfɛkt/ (say multuhpluyuhr uhfekt) noun Economics an effect achieved in certain circumstances whereby a relatively small change in input, as investment money, can produce a relatively large change in output …   Australian English dictionary

  • multiplier — n. 1 a quantity by which a given number is multiplied. 2 Econ. a factor by which an increment of income exceeds the resulting increment of saving or investment. 3 Electr. an instrument for increasing by repetition the intensity of a current,… …   Useful english dictionary

  • Fiscal multiplier — This article is about the effect of spending on national income. For the multiplier effect in banking, see Fractional reserve banking. In economics, the fiscal multiplier is the ratio of a change in national income to the change in government… …   Wikipedia