Multiplier Effect - GCSE Geography Definition

The "Multiplier Effect" is a concept in geography and economics that explains how an initial amount of spending in an economy can lead to an even greater increase in economic activity and income. Imagine a new business opens in a town, hiring local workers and buying supplies from nearby shops. The workers then spend their wages in the local area on things like groceries and entertainment. This spending supports more local jobs and businesses, which in turn spend more money in the community. So, the initial expenditure from the new business "multiplies" as it spreads through the economy, helping the town grow and become more prosperous.