Stock Markets and Economy

Disclaimer - On stock markets, my views may not be used to make investment decisions. I may or may not hold positions in the market. My views on Economics often contradict the stand of mainstream economists.

Tuesday, July 7, 2009

Govt. spending - The multiplier effect

Just a passing thought on govt spending.

Modern Economic theories tells us that govt. spending has a multiplier effect. In other words, if govt. spends Rs 100/-, the GDP goes up by more than Rs. 100/-. Really?

If that were true, should not the socialist economies have been very rich?

Posted by GK at 12:59 AM

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