Thursday, September 3, 2009

tutor2U must include negative multipliers

In this post they talk about multipliers from government spending.

"If the $10bn increase [in government spending] caused total United States economic output to rise by $5bn, the multiplier would be 0.5; if it rose by $15bn, the multiplier would be 1.5."

It can also drop by $5 billion, making the multiplier -.5. There are many, many, many multipliers that have negative value. Norm Mineta's San Jose Light Rail fiasco, for example. Many economists consider this depression to be the result of a negative multipliers, from lil Bush.

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