suppose that in a country, }% or all income the people receive is spent, and % I

Question

suppose that in a country, }% or all income the people receive is spent, and % Is saved If saving habits do not change and continue indefinitely, what is the total amount of spending generated in the long run by a 60 billion dollar tax rebate which is given to the country's citizens to stimulate the economy? NOTE: Include the entire government tax rebate as part of the total spending. First find the largest terms of the infinite series, then find the total amount of spending Enter the four largest terms of the infinite series in order from larger to smaller as numbers. (Round your answers to 3 decimal places.) Amount of Spending- Submit Answer Tries 0/1o +... billions What is the total amount of spending generated? (Round your answer to two decimal places. Amount of Spending- Submit Answer Tries 0/10 billions

Explanation / Answer

MPC = 0.7 and MPS = 0.3

Amount of spending = 60 + (60 * 0.7) + (60 * 0.49) + (60 * 0.343) + ... billion

Amount of spending = 60 (1 + 0.7 + 0.49 + 0.343 + ...)

Amount of spending = 60 ( 1 / 1 - 0.7) = 200 billions

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