Injection multiplier

The injection multiplicator is a concept in the economic circulation diagram. The injection multiplier is a phenomenon in economics that means that an injection into the economy will make a higher contribution to total production than just the injection.

The injection multiplier means there will be an expansionary effect of a contribution in the economic circulation. The multiplier effect arises because the increased income in the economy leads to increased consumption. Consumption is limited by leakage such as savings, taxes and imports. Leakage makes the injection effect less expansionary.