The ______ impact, therefore, is the primary impact when applying the multiplier.

• A. induced
• B. primary
• C. direct
• D. secondary

Answer: (B)

When the multiplier is applied, you begin with the initial change in economic activity caused by the new spending. That initiating effect is the primary impact. It captures the immediate increase in output, employment, and income in the sectors directly involved. The multiplier then propagates this through the economy, creating indirect effects (through suppliers and other connected industries) and induced effects (from higher household spending funded by the new income). So the primary impact is the launching point of the whole process, which is why it’s the best term to fill the blank. The other options describe effects that occur after the initial kick-off (induced) or are labels for parts of the process (indirect/secondary) or are simply alternate terms for the same initial effect in some contexts, but this item uses primary to denote that initiating impact.