(a) Explanation Formula used: The sum of first n terms of a geometric series with common ratio r is given by S n = a 1 ( 1 − r n ) 1 − r , where a 1 is the first term of the series. Calculation: It is given that the average wage earner in a certain country saves 8% of the home pay and spends the other 92%. Also, proposed tax cut is of $10 billion. Of the $10 billion received by the original beneficiaries of the proposed tax cut, the 8% of the $10 billion, that is ( 0.92 ) ( 10 ) billion dollars will be spent. Of the ( 0.92 ) ( 10 ) reinjected into the economy, 92 % of it or ( 0.92 ) ( 0.92 ) ( 10 ) billion dollars will find its way back to economy again. This process will go on, so the one-time proposed tax cut will result in additional spending over the years in the amount as shown below: ( 0.92 ) ( 10 ) + ( .92 ) 2 ( 10 ) + ( 0.92 ) 3 ( 10 ) + … = ( 0.92 ) ( 10 ) [ 1 + 0 (b) To determine To estimate: The impact of the proposed $10 billion tax cut on the economy over the long run in terms of the additional spending generated.

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Chapter 11, Problem 49RE

(a)

To determine

To estimate: The impact of the proposed $10 billion tax cut on the economy over the long run in terms of the additional spending generated.

(b)

To determine

To estimate: The impact of the proposed $10 billion tax cut on the economy over the long run in terms of the additional spending generated.

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Chapter 11, Problem 48RE

Chapter 11, Problem 50RE

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Chapter 11 Solutions

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Ch. 11.1 - In Exercises 110, find the first three Taylor...Ch. 11.1 - Prob. 10E Ch. 11.1 - Prob. 11E Ch. 11.1 - Prob. 12E Ch. 11.1 - Prob. 13E Ch. 11.1 - Prob. 14E Ch. 11.1 - In Exercises 1120, find the nth Taylor polynomial...Ch. 11.1 - Prob. 16E Ch. 11.1 - Prob. 17E Ch. 11.1 - Prob. 18E Ch. 11.1 - Prob. 19E Ch. 11.1 - Prob. 20E Ch. 11.1 - Prob. 21E Ch. 11.1 - Prob. 22E Ch. 11.1 - Prob. 23E Ch. 11.1 - Prob. 24E Ch. 11.1 - Prob. 25E Ch. 11.1 - Prob. 26E Ch. 11.1 - Prob. 27E Ch. 11.1 - Prob. 28E Ch. 11.1 - Prob. 29E Ch. 11.1 - Prob. 30E Ch. 11.1 - Prob. 31E Ch. 11.1 - Prob. 32E Ch. 11.1 - Prob. 33E Ch. 11.1 - Prob. 34E Ch. 11.1 - Let f(x) = ex. a. 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To estimate: The impact of the proposed $10 billion tax cut on the economy over the long run in terms of the additional spending generated.

Solution Summary: The author calculates the impact of the proposed 10 billion tax cut on the economy over the long run. The sum of first n terms of a geometric series with common ratio r is given by S_n

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To estimate: The impact of the proposed $10 billion tax cut on the economy over the long run in terms of the additional spending generated.

To estimate: The impact of the proposed $10 billion tax cut on the economy over the long run in terms of the additional spending generated.

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Chapter 11 Solutions