In economics, the multiplier effect refers to the fact that when there is an injection of money to consumers, the consumers spenda certain percentage of it. That amount recirculates through the economy and adds additional income, which comes back to theconsumers and of which they spend the same percentage. This process repeats indefinitely, circulating additional money throughthe economy. Suppose that in order to stimulate the economy, the government institutes a tax cut of $8 billion. If taxpayers areknown to save 17% of any additional money they receive, and to spend 83%, how much total money (T) will be circulatedthrough the economy by that single $8 billion tax cut?(Enter your answer rounded to the nearest whole number.)47.0589billion dollarsIncorrect

given, $8 billion tax spend = 83%

Answered: In economics, the multiplier effect…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 37P

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