In economic impact terms, what is the overall effect on total industry output, earnings, employment, and value added resulting from a change in final demand?

• A. Total economic impact
• B. Direct impact
• C. Induced impact
• D. Secondary impact

Answer: (A)

When final demand changes, the full consequence across the economy is captured by the total economic impact, which includes all the ripple effects through output, earnings, employment, and value added. This encompasses the direct effects in the immediately affected industries, the indirect effects as those industries buy more inputs from suppliers, and the induced effects from higher incomes leading to more consumer spending. Because it sums these components, it represents the complete change in economic activity caused by the final-demand shift. The other terms describe only part of that process: the direct impact is the initial response in the affected sectors, the induced impact is the consumer-spending ripple, and secondary impact isn’t the standard term used for the whole sequence.