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The term "indirect impacts"refers to the production and sales of goods and services <br />that result from the fact that direct impacts require inputs from other business sectors <br />For example,in order to sell hay at the retail fevel (a direct impact),materials will be <br />purchased from local wholesalers and growers.This second level of activity is the <br />source of indirect impacts. <br />Induced Impacts <br />Tlie changes in employmentin those industries that experience both direct and indirect <br />impacts result in changes in income that are spent in the region to purchase consumer <br />goods and services.This income effect is the source of induced impacts.For example, <br />if hay is produced locally,local incomes increase.Local spending of this additional <br />income is the basis of an induced impact. <br />Total Economic Impact <br />The total economic impact is found by adding all three levels of impact for each sector <br />of the local economy.The larger the magnitudeof local purchases,the larger will be the <br />total local impact;conversely,the larger the podion of expenditures which are made <br />outside the local economy,the smaller will be the total local impact.The amount spent <br />outside the region does not effect the local economy,but the amount spent locally on <br />such things as food,services,and supplies is considered a focal impact.Similarly, <br />purchases resulting from increased wages which stem from both direct and indirect <br />impacts are the basis for the induced impact,a fudher round of local spending.Induced <br />impacts lead to additional rounds of indirect and induced impacts.This is referred to as <br />a "multipliereffect." <br />To the extent that expenditures occur outside the local economy,they are considered to <br />34