Suppose that out of the original 100 increase in government spending, 33 will be recycled back into purchases of domestically produced goods and services in the second round and 10.89 is spent in the third round. Following this multiplier effect, what value would be recycled in the fourth round of this cycle?
A. 3.59
B. 9.89
C. 3.37
D. 5.23
Answer:A
Suppose that out of the original 100 increase in government spending, 33 will be recycled back into purchases of domestically produced goods and services in the second round and 10.89 is spent in the third round. Following this multiplier effect, what value would be recycled in the fourth round of this cycle?
A. 3.59 B. 9.89 C. 3.37 D. 5.23
Explanation: Type: Multiple Choice