Thread: Economics help!
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      04-15-2011, 12:19 AM   #6
arggg45
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Quote:
Originally Posted by skinnycow View Post
a.
1 / (1 - .7)
1 / .3
3.33 or 3 1/3 multiplier

b.
(-.7) / (1 - .7)
(-.7) / (.3)
-2.33 or -2 1/3

c.
[(-$185) x (-.7)] / (1 - .7)
$129.5 / .3 = $431.66 or $431 2/3 billion

d.
($185) / (1-.7)
$185 / .3 = $616.66 or $616 2/3 billion

e.
No, based off the multiplier of $185 billion increased government spending, the result will be $431.33 billion. Unlike the tax cut, the same amount in government spending will not be enough to close the gap of $615 billion. A tax cut of $185 billion would close the gap, using the multiplier.



its been awhile, but everything should be correct. i'm 80% sure e is right, but look over it to make sure it makes sense.
He's right.
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