How does an increase in government spending affect aggregate demand through the multiplier effect?

When the government increases its spending, it directly puts more money into the economy. This extra spending can be for things like building roads or funding schools, which creates jobs and pays workers. These workers then have more money to spend on goods and services, boosting demand even further. This is called the multiplier effect because the initial spending leads to more rounds of spending throughout the economy. For example, if the government spends $1 million on a new school, and that creates jobs for construction workers, those workers will spend their wages at local stores, leading to more demand and possibly more jobs in those stores.