Suppose that investment demand increases by $400 billion and no leakages occur except household saving. Assume further that households have a marginal propensity to consume of 75 percent. Instructions: Round your responses to one decimal place. a. Compute four rounds of multiplier effects. Changes in This Cycle's Spending (in billions) $400.0 Cumulative Change in Spending (in billions) $400.0 First cycle Second cycle Third cycle Fourth cycle b. What will be the final cumulative impact on spending? billion

Suppose that investment demand increases by $400 billion and no leakages occur except household saving. Assume further that households have a marginal propensity to consume of 75 percent. Instructions: Round your responses to one decimal place. a. Compute four rounds of multiplier effects. Changes in This Cycle's Spending (in billions) $400.0 Cumulative Change in Spending (in billions) $400.0 First cycle Second cycle Third cycle Fourth cycle b. What will be the final cumulative impact on spending? billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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