multiplier

Definition

A number which indicates the magnitude of a particular macroeconomics policy measure. In other words, the multiplier attempts to quantify the additional effects of a policy beyond those that are immediately measurable. For example, a decrease in taxation will have more of an effect than just the value of the reduced taxes. It will lead to greater disposable income which might cause an increase in consumption, which in turn might increase employment in industries which enjoy greater demand and so on. So the total effect of the implemented policy equals the effect of the policy measure, times the multiplier. This is true of most macroeconmic policy measures, because the actual effect of the measure cannot be quantified by the effect of the measure itself.

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net income multiplier exercise settlement amount