The multiplier effect

These are some short notes that explain the multiplier effect!

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What is it?

The multiplier effect is when something good happens which leads onto another good thing.

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Example--

The weather gets warmer.

Sales in Ruths ice cream company boom.

So Ruth has to go and buy more cones from Richard.

So now Richards company gets more income.

Because Richard is making so many cones he has to make his factory bigger.

So he calls in Ben who with his company build more onto Richards factory.

So Bens company is now happier as it has more money.

Now everyone is happy because they get ice cream!

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Explanation

Ruth gets money for her ice creams.

But then loses some to Richard for his cones.

But now Richard is richer.

But then Richard loses money as he has to increase the size of his factory.

But then he gets the money back from selling his cones to Ruth and other people.

Also Ben gets money from Richard so he's happy.

Then Ruth gains her money back (that she gave to Richard) as more and more people are buying her ice creams.

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