What is the concept of “fiscal multipliers” in economics?

Fiscal multipliers refer to the effect that government spending or tax changes have on economic activity. When the government increases its spending, it can lead to a greater increase in economic output, as businesses respond by producing more goods and services to meet increased demand. The fiscal multiplier measures this effect, showing how much additional economic activity is generated by each dollar of government spending or tax reduction. If the multiplier is high, the economy responds strongly to fiscal policies, while a low multiplier indicates that fiscal policies have less impact on overall economic growth. Understanding fiscal multipliers is crucial for determining the effectiveness of government interventions in the economy.