THE

MULTIPIER
EFFECT
KRISTINE JOYCE RABANO
BSTOM1
WHAT IS MULTIPIER EFFECT ALL ABOUT?

The multiplier effect refers to the increase in final

income arising from any new injection of spending.

Multiplier effect which in its simplest form is how

many times money spent by a tourist circulates
through a country's economy.
EXAMPLE:

Money spent in a hotel helps to create jobs directly in

the hotel, but it also creates jobs indirectly elsewhere
in the economy. The hotel, for example, has to buy
food from local farmers, who may spend some of this
money on fertilizer or clothes. The demand for local
products increases as tourists often buy souvenirs,
which increases secondary employment.
THE IMPORTANCE AND OBJECTIVES

Tourism Multiplier Effect not only creates jobs in the

tertiary sector, it also encourages growth in the
primary and secondary sectors of industry.
FUNCTION
The Tourist Multiplier Effect
WHO IS RESPONSIBLE IN ITS
MANAGEMENT AND
OPERATION?
THE POSITIVE AND
NEGATIVE EFFECT
THE DOWNWARD OR ‘REVERSE’ MULTIPIER

A withdrawal of income from the circular flow will

lead to a downward multiplier effect. Therefore,
whenever there is an increased withdrawal, such as
a rise in savings, import spending or taxation, there
is a potential downward multiplier effect on the rest
of the economy.