Question

The government buys new weapons systems. The manufacturers of weapons pay their employees. The employees spend this money on goods and services. The firms from which the employees buy the goods and services pay their employees. This sequence of events illustrates:

Answer 1

Answer:

multiplier effect

Explanation:

Based on the information provided within the question it can be said that this sequence of events illustrates the concept of a multiplier effect. In the context of economy, this effect demonstrates the increase in national income and consumption when an economy experiences an increase in spending. Such as is demonstrated in the scenario, as the government buys the weapons it causes a chain of spending which allows money to flow and reach employees who receive that money as income and also spend more.