Multiplier & Accelerator | A-Level Economics Notes
These revision notes cover everything you need to know about the Multiplier Effect and the Accelerator Theory for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.
What is the definition of the multiplier?
The multiplier is the extent to which an injection or withdrawal affects national income.
What is an example of the multiplier effect?
The multplier effect occurs when an increase in aggregate demand leads to further increases in aggregate demand.
- The government might spend £1 billion on an infrastructure project.
- This creates jobs for construction workers, who can earn extra income.
- These construction workers might spend some of this income in local pubs and cafes.
- This creates more new jobs, and more income for people in the economy.
Multiplier effect diagram
