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2.4.4 The multiplier

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Question 3

Expansion of the Aero-Dome Space and Rocketry Center

The regional development agency has approved a £280 million investment to expand the Aero-Dome Space and Rocketry Center, constructing new interactive aerospace exhibition galleries and a high-speed shuttle terminal to connect the complex to the regional airport.

Using this example, explain how the multiplier process leads to a final increase in aggregate demand that is larger than the initial investment.

[4]

2.4.4 The multiplier Questions

  1. A Level
  2. /Economics
  3. /2.4.4 The multiplier