Fiscal multiplier

Okay kiddo, let me explain the concept of fiscal multiplier to you. It's basically like when you have a toy truck and you want to make it go faster. One way to do that is to push it harder with your hand, that's like the government spending more money on things like roads or schools.

When the government spends more money, it can create a ripple effect throughout the economy, kind of like when you throw a pebble into a pond and see the ripples spread out. This is called the fiscal multiplier effect.

The idea is that when the government spends money, that money goes to people or businesses who then use it to buy things themselves. For example, if the government spends money on building new schools, the construction workers get paid, and then they use that money to buy groceries, clothes, or pay their bills, which then supports those businesses.

This continues, with more and more people getting paid and spending money, creating more demand for goods and services, and stimulating the economy. This is why the fiscal multiplier is important because it helps to boost economic growth and create more jobs.

It's kind of like how, if you work together with your friends to build a huge, awesome Lego castle, you can make it even better and bigger than if you were building it all by yourself. The more people working on it, the more fun it is, and the better it turns out in the end.

So, in summary, the fiscal multiplier effect is like a toy truck going faster because of a stronger push or a Lego castle getting even better because more people are working on it. It's when government spending creates a ripple effect throughout the economy, stimulating growth and creating jobs.