Multiplier in Economics: Definition, Effect & Formula

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question 1 of 3

In economics, the _____ is the amount of new income that is generated from an addition of extra income.

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1. _____ is when a government increases spending and money distribution for the purpose of economic stimulation.

2. What is the multiplier if the marginal propensity to consume is 0.5?

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About This Quiz & Worksheet

This quiz/worksheet combo will test your understanding on how the multiplier in economics can influence the flow of money.

Quiz & Worksheet Goals

In these assessments, you will discover what you know about the following areas:

  • How the marginal propensity to consume impacts the economy
  • The definition of the multiplier in economics
  • How to determine the multiplier

Skills Practiced

  • Information recall - access the knowledge you've gained regarding the economic effects of changes in the marginal propensity to consume
  • Knowledge application use your knowledge to answer questions about the meaning of the multiplier and how it can generate additional money in the economy
  • Interpreting information - verify that you can read information regarding how to determine the multiplier by using the marginal propensity to consume and interpret it correctly

Additional Learning

Expand your knowledge of multiplier and its effects on the economy by reviewing the lesson called Multiplier in Economics: Definition, Effects and Formula . The lesson will cover the following areas:

  • The formula for calculating the multiplier
  • A definition of marginal propensity to consume
  • The multiplier effect on consumption
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