Using an MPC of 0.80, the impact of $100 spent the government will be as follows: Spending Cycle

Question:

Using an MPC of 0.80, the impact of $100 spent the government will be as follows:

Spending Cycles	Change in Spending during Cycle (billions per year)	Cumulative Increases in Spending (billions per year)
1	$100	$100
2	80	180
3	64	244
4	51.2	295.2
5	40.9	336.1

(a) Recompute the first five cycles using an MPC of 0.90.

(b) How much more consumption occurs after the first five cycles?

Price: $2.99

Solution: The answer consists of 1 page
Deliverables: Word Document