Local public officials may be confronted with the use of economic multipliers when asked to react to project proposals, to environmental impact statements, or to other studies containing economic impact analyses. Employment, income, and output multipliers are tools for estimating private sector economic impacts of a new development within a local economy. These tools provide no final answers--and in fact may generate more questions than answers. The concepts presented in this guide will help determine which economic impacts are actually analyzed, and to question and evaluate the assumptions on which a study's projections are based. Key questions are listed for employment, income and payrolls, sales and output, and new investment. A methodology section addresses kinds of multipliers (employment, household income/earnings, output/business), estimation techniques, evaluating multipliers, leakage and local consumption, and structure of the local economy. The conclusion section offers some precautions about using multipliers: estimates are sometimes exaggerated; size of the multiplier should not be the sole evaluation criteria; an aggregate multiplier may not apply equally to all service sectors; and multipliers indicate nothing about the profitability of the proposed enterprise. (BRR)