A Ripple Effect Occurs When An Initial Disturbance To A System Propagates To Disturb The Whole System Stock Image

A ripple effect occurs when an initial disturbance to a system propagates outward to disturb an increasingly larger portion of the system, like ripples expanding across the water when an object is dropped into it. The ripple effect is often used colloquially to mean a multiplier in macroeconomics. For example, an individual's reduction in spending reduces the incomes of others and their ability to spend. In a broader global context, research has shown how monetary policy decisions, especially by major economies like the US, can create ripple effects impacting economies worldwide, emphasizing the interconnectedness of today's global economy