A simple ceremony became an extravaganza yesterday as President Carter signed the New York City financial aid bill before thousands of New Yorkers gathered at City Hall and thousands of others who peered down from nearby skyscrappers.

The president from Georgia also delivered the tribute, flavored with Yiddish, to New York, its politicians and its citizens and to proclaim his full support for its recovery efforts, however unpopular they may be in other parts of the country.

"New Yorkers have traditionally reached out to those who needed help, not only here, but throughout the rest of the nation and the world as well," the president said.

"People in other parts of the country have sometimes been jealous of New York," he added, "and there were a few who were willing to see the big city taken down a peg . . . Those who thought that the United States was going to stand by while its greatest city went under were wrong."

At the same time, he reassured the rest of the country that the $1.6 billion in federal loan guarantees authorized in the law "is not a handout. New York has asked for no handout and has received none . .. The bill opens up enough breathing space for New Yorkers to complete the difficult task of restoring yourselves to financial and economic self-sufficiency."

The entire production - held just off Broadway in lower Manhattan - was produced under a new White House effort to better publicize administration victories.

The New York aid bill presented one of the few such occasions in Carter's recent dealings with Congress. The rest of his urban aid package faces an uncertain future.

The hard-fought compromise New York bill will allow the city to issue bonds guaranteed by the U.S. government for 15 years.

This means that investors, who have been reluctant to extend credit to the city can be sure of being repaid.

The city has been in fiscal crises throughout the mid-seventies for a variety of reasons, including mismanagement and recession.

Carter said that the measure was "designed to put behind us a danger that would create problems for all of our cities and for the financial markets of the nation and the world. If New York keeps its commitments - as I'm sure it will - then this bill will not cost the American taxpayer a cent."

Carter praised local political leaders who accompanied him on the platform yesterday for taking hard steps to solve the city's problems.

Mayor Edward I. Koch "led New York in imposing cost discipline on itself," he said. Gov. Hugh L. Carey proved himself a man of "unflinching courage" during the city's crisis, the president said.

"He is one Southern Baptists call a real mensch," the president said in his Georgia drawl. A mensch, in Yiddish, is a person of strong character, a person with heart and soul.

The president planned to attend a Broadway production last night with his wife, Rosalynn, following the round of receptions. He would spend the night at Gracie Mansion, the residence of the mayor of New York, before flying home in the morning.

The New York visit appears to have been the work of White House media advisers Gerald Rafshoon, the Atlanta advertising executives who joined the White House staff July 1.

He and other aides believe that the administration's low public opinion ratings are in part due to the slowness in claiming credit for administration achievements.

The president signs most bills at the White House with little notice from the press. The New York ceremony - complete with a choir, a band, a Metropolitan Opera mezzo soprano - received extensive coverage yesterday and was broadcast live on local television.

It is no small effort to take the White House out of town. There are at least three jet aircraft for the president, the press, numerous aides, hordes of Secret Service agents. There are helicopter rides, motorcades, roadblocks, and police everywhere.

A presidential trip is always one of the best shows in town, a fact not lost on Carter advisers.