Video narration
Notice the important flip: the first ₹100 is not the whole effect. It becomes a stream of smaller spending rounds. Add the chain: ₹100 plus ₹80 plus ₹64 plus ₹51.20, and so on. No single later round is as large as the first, but together they add up. Rather than adding forever by hand, use the multiplier relationship: ΔY = k × ΔI. Total income change equals the multiplier times the initial investment change. So ΔY equals 5 times ₹100: ₹500. This is a deliberately simple model. In a real economy, taxes, imports, changes in prices, spare capacity, and changes in saving behaviour affect the result. The multiplier is not always five. But the logic remains: when new spending reaches people who spend part of their added income, it supports further rounds of income. Return to the local shop. The customer's purchase did not create unlimited income because each recipient saved a portion. Yet it supported income at the shop, then at another business, then another. So how can ₹100 of investment raise income by ₹500? When households spend 80 percent of each new income, the multiplier is five.