Households her spending increase: 4: More income Product markets 2: Sales increase by $100 b 6: Sales increase 1: Government spends $100 billion Government Factor markets Business firms 3: Increased jobs and w Multiplier proces In the figure above, a cycle is originated by a change in spending in the product market. If the MPC were 0.8, Instructions: Enter your responses as a whole number. a. how much spending would occur in the third cycle? $ billion b. how many spending cycles would occur before consumer spending increased by $200 billion? Hint: Focus on consumer spending. cycle(s)

Households her spending increase: 4: More income Product markets 2: Sales increase by $100 b 6: Sales increase 1: Government spends $100 billion Government Factor markets Business firms 3: Increased jobs and w Multiplier proces In the figure above, a cycle is originated by a change in spending in the product market. If the MPC were 0.8, Instructions: Enter your responses as a whole number. a. how much spending would occur in the third cycle? $ billion b. how many spending cycles would occur before consumer spending increased by $200 billion? Hint: Focus on consumer spending. cycle(s)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

ChapterD: The Expenditure-output Model

Section: Chapter Questions

Problem 24CTQ: Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on...

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Exercise D15 What is the multiplier effect?
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