The Expenditure Multiplier?

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The Expenditure Multiplier?

What is the multiplier principle? Why is it important?

2007-03-28 13:45:26 · 1 answers · asked by fradykat 2 in Social Science ➔ Economics

1 answers

It essentially means that if you increase spending, probably in this case "G" you are spending and making more jobs, making more people buy more things etc etc.

If $1M is spent, then 1000 jobs are created, and those 1000 people buy lots of stuff,creating 10,000 more jobs , and those people buy lots of stuff etc etc etc.

2007-03-28 19:12:10 · answer #1 · answered by Santa Barbara 7 · 0⤊ 0⤋