In economics, the multiplier effect refers to the fact that when there is an injection of money to consumers, the consumers spend a certain percentage of it. That amount recirculates through the economy and adds additional income, which comes back to the consumers and of which they spend the same percentage. This process repeats indefinitely, circulating additional money through the economy. Suppose that in order to stimulate the economy, the government institutes a tax cut of $8 billion. If taxpayers are known to save 11% of any additional money they receive, and to spend 89%, how much total money (T) will be circulated through the economy by that single $8 billion tax cut? (Enter your answer rounded to the nearest whole number.) billion dollars

Question
In economics, the multiplier effect refers to the fact that when there is an injection of money to consumers, the consumers
spend a certain percentage of it. That amount recirculates through the economy and adds additional income, which comes
back to the consumers and of which they spend the same percentage. This process repeats indefinitely, circulating additional
money through the economy. Suppose that in order to stimulate the economy, the government institutes a tax cut of $8 billion.
If taxpayers are known to save 11% of any additional money they receive, and to spend 89%, how much total money (T) will
be circulated through the economy by that single $8 billion tax cut?
(Enter your answer rounded to the nearest whole number.)
billion dollars

Image Transcription

In economics, the multiplier effect refers to the fact that when there is an injection of money to consumers, the consumers spend a certain percentage of it. That amount recirculates through the economy and adds additional income, which comes back to the consumers and of which they spend the same percentage. This process repeats indefinitely, circulating additional money through the economy. Suppose that in order to stimulate the economy, the government institutes a tax cut of $8 billion. If taxpayers are known to save 11% of any additional money they receive, and to spend 89%, how much total money (T) will be circulated through the economy by that single $8 billion tax cut? (Enter your answer rounded to the nearest whole number.) billion dollars

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