What term describes the potential of a job to produce additional jobs?

• A. Economic Leakage
• B. Multiplier Effect
• C. Spillover
• D. Multiplier Phenomenon

Answer: (B)

The idea being tested is how a single job can lead to more jobs through the flow of spending in the economy. When a new job is created, the worker earns wages that are spent on goods and services. This increases demand, prompting firms to hire more workers to meet it, whose wages are then spent again, continuing the cycle. The strength of this process is the multiplier effect—the extent to which initial employment boosts total employment. How large the multiplier is depends on how much income stays in the local economy versus leaks out through saving, taxes sent elsewhere, or buying imports. More leakage weakens the loop, while staying and circulating money locally strengthens it. Other terms like Economic Leakage describe the portion of income that leaves the local economy, Spillover refers to broader indirect benefits, and Multiplier Phenomenon isn’t a standard term, so the described concept is the multiplier effect.