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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 level (a direct impact), materials will be <br />purchased from local wholesalers and growers. This second levef of activity is the <br />source of indirect impacts. <br />Induced Impacts <br />Ttie changes in employment in 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 ~ncrease. 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 focal economy. The larger the magnitude of local purchases, the larger will be the <br />total local Impact; conv~rsely, the larger the portion 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, s~rvices, and supplies is considered a local impact. Similarly, <br />purchases resulting from Increased wages which stem from both direct and i'ndf rect <br />impacts are the basis fur the Induced "impact, a further round of focal ·spending. Induced . . . <br />impact~ lead to additional rounds of indirect.and induced impacts. This is referred to as <br />a .. multiplier effect." <br />To the extent that expenditures occur outside the local economy, they are considered to <br />34