What is described by the term 'multiplier' in economics?

The term 'multiplier' in economics refers specifically to the concept that illustrates how an initial increase in spending (aggregate demand) leads to a more significant overall increase in national income. When there is an increase in aggregate demand, whether through government spending, investment, or consumption, it stimulates economic activity. This initial spending creates income for businesses and workers, who then spend part of this income on goods and services, further bolstering economic activity.

This process continues, with each round of spending resulting in additional income generation, hence the term 'multiplier effect.' The multiplier quantifies the overall impact that an initial change in spending has on the broader economy, reflecting how interconnected and responsive economic components are to demand changes.

Other answers focus on different aspects of economic relationships. For instance, discussing the ratio of total output to labor input relates to productivity, while changes in tax revenues pertain to fiscal policy analysis. The decrease in savings when consumption increases describes consumer behavior but does not capture the broader economic concept of the multiplier itself.