The government's decision to subsidise a new commercial spaceport has ignited intense economic debates. Analysts highlight that the high initial capital outlay for launchpad construction and aerospace engineering facilities will yield substantial regional benefits. Critics, however, point to the high import content of specialised rocket components, which acts as an immediate withdrawal from the domestic circular flow.
Nonetheless, proponents argue that the local procurement of materials and employment of high-skilled technicians will trigger a significant multiplier effect (Extract F, line 8). This initial injection of capital is expected to circulate repeatedly through the regional economy, boosting consumer services and manufacturing. However, the ultimate expansion of regional GDP depends heavily on the propensity of local households to save rather than spend their additional income.
Define the term 'multiplier effect' as referenced in Extract F.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.