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The skill multiplier is an important part of a larger economic concept called the multiplier effect. The multiplier effect acknowledges that in terms of money, everything is connected. If one business has a great year of positive earnings, that business will likely invest in additional outside goods and services and so on down the pipeline. This is true for individuals as well. In short, the multiplier effect states that small increases in spending from consumers, the government, or investment lead to much larger increases in economic output.

The Multiplier Effect or the Economic Multiplier

The multiplier effect, also referred to as the economic multiplier, is the expansion of a country’s monetary supply that results from the amount its banks can lend. The size of the multiplier effect ...

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