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Explain the Logic of the Multiplier Effect

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Essay

Explain the logic of the multiplier effect.


Definitions:

Expected Returns

The anticipated average return of an investment over a certain period, taking into account both the probability and the impact of all possible outcomes.

Corresponding Weights

The respective importance or influence assigned to components within a mathematical formula or financial model.

Probability Distribution

A mathematical representation that enumerates all possible values and the likelihood of each for a random variable within a determined boundary.

Coefficient Of Correlation

A statistical measure that calculates the strength and direction of the relationship between two variables.

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