Value of industry output and income payments are measured in terms of dollars. Indirect impacts depend on the primary firm's purchases of materials and services from vendors within the region's geographic boundary. The purchases by the primary firm represent sales to the vendors which provide materials and services. As in the case of the primary firm, a vendor's sales are allocated between the purchases of materials and services and the income payments to employees, government and property owners of the vendor's operation. Thus, the transactions among the primary firm, its vendors, and the vendors of the vendors generate multiple rounds of indirect economic impacts.
Induced impacts are a third category of economic impacts.
Induced impacts occur as the result of workers and property owners spending their income payments on consumer goods and services within the region's geographic boundary. Therefore, while the primary firm may have sold citrus nursery trees, the purchases of television sets, theater tickets, bedroom furniture and the like by the employees of nursery operations can be credited as an induced economic impact of the citrus nursery industry. Similar to indirect impacts, induced impacts accumulate through the layers of affiliated business that serve as vendors to the primary firm. Total economic impacts are the sum of direct, indirect and induced impacts. For example, total economic impact of the Florida citrus nursery industry would not include sales, income or employment at citrus processing plants because the processing of citrus products occurs at a stage after the production of a nursery citrus tree.