Question

If people spend 2/3 of any extra income they receive, new autonomous spending of $10 causes equilibrium to increase by

Answer 1

answer=$30.00 Increase in total spending = $10 + (.75)($10) + (.75)(.75)($10) + (.75)(.75)($10) + ... = $10 * (1 + .75 + .752 + .753 + ...) ---------------------------- | (GEOMETRIC SERIES-- converges to a finite number, according to a simple formula) = $10 * [1/(1-.75)] ----------- | 4 = $30