ECON101:
MULTIPLIER effect: how in the economy has ripple effects on other economic transactions. Therefore, a single transaction has multiple effects.

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Wall Street Journal explains the MULTIPLIER EFFECT in straightforward terms by looking at the expansion and benefits of the expanded food stamps programs, SNAP. The WSJ article explains:

The U.S. Department of Agriculture calculates that for every of food-stamp spending, there is .20 of total economic activity, as grocers and farmers pay their employees and suppliers, who in turn shop and pay their bills.

While other stimulus money has been slow to circulate, the food-stamp boost is almost immediate, with 80% of the benefits being redeemed within two weeks of receipt and 97% within a month, the USDA says.

Further in the article, WSJ states that SNAP enrollments rose by five million from March 2008 to March 2009.

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