Which of the following describes the economic phenomenon where an increase in autonomous spending leads to a proportionately larger increase in total national income?

💡 Solution & Explanation

The multiplier effect demonstrates how an initial injection of investment or government expenditure generates successive rounds of consumer spending, magnifying the final national income. Alternative concepts describe induced investment changes or reductions in private expenditure due to fiscal deficits. The magnitude of this effect depends directly on the marginal propensity to consume.