Multiplier

noun (countable)

/ˈmʌltɪplaɪər/

In Keynesian macroeconomics, the ratio by which an initial change in autonomous expenditure (especially government spending or investment) generates a larger final change in national income. The fiscal multiplier — central to debates on stimulus vs. austerity — is generally estimated at 0.8–1.5 for developing economies; India's Economic Survey 2020-21 estimated the government capex multiplier at approximately 4.25, making capital expenditure a preferred fiscal lever over revenue spending.

✍️ Usage in a UPSC answer

The Economic Survey 2020-21's finding of a government capital-expenditure multiplier of 4.25 provided the analytical basis for India's subsequent shift toward front-loading public capex as the primary counter-cyclical instrument.

Synonyms

acceleratoramplifiercascade effectripple effectsnowball effect

Antonyms

dampenerdragleakagecrowding-out effect

🌱 Word Family

multiply (verb), multiplication (noun), multiplicative (adjective), multiplier effect (noun phrase)

🔡 Root

Latin multiplicare = to multiply; multi- = many + plicare = to fold

📜 Etymology

The term entered economics through Richard Kahn's 1931 article on the employment multiplier, later formalised by John Maynard Keynes in 'The General Theory' (1936) as the investment multiplier. It derives from the simple Latin multiplicare, meaning to increase manifold. In post-independence India, multiplier analysis underpinned Nehru-Mahalanobis planning, which prioritised capital goods industries whose high multipliers would drive broad-based growth.

🧠 Memory Hook

Imagine dropping a stone in a still pond: the initial splash (government spending) creates ripples that spread far wider. Each ripple is income re-spent — the multiplier counts how wide those rings travel before they die out.

📝 Seen in UPSC Question Papers

Prelims 2021 — Banking

Real UPSC previous-year questions whose text uses “Multiplier” — proof this word earns its place on your list.

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

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