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InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

multiplier  

Definition 1.

A number which indicates the magnitude of a particular macroeconomic policy measure. For example, a decrease in taxation will lead to greater disposable income which might cause an increase in consumption, which in turn might increase employment in industries which enjoy greater demand and so on. Thus, the effect of the reduction in taxes is actually greater than the amount by which taxes were reduced. This is true of most macroeconomic policy measures. The multiplier times the numeric measure of the policy change will quantify the effect of the policy measures.
 
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