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Politics : View from the Center and Left
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To: Sun Tzu who wrote (31267)11/9/2006 9:20:57 PM
From: neolib  Read Replies (2) of 541729
 
The "Multiplier Rule" says for every dollar injected at the bottom of economy, the GDP increases by 5x-10x (the 10x number is closer to reality). This is how it goes: government pays a poor fellow lunch money, who spends it on food at supermarket, who passes it on to the cashiers and suppliers, who pass it on to farmers and truck drivers, who... each person along the chain saves 3%-30% of their earnings and spends the rest. The summation of all these spendings raises the GDP.

Despite what anyone might claim, a figure of 5x-10x is the economic equivalent of a perpetual motion machine claim in physics. It is BS.
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