Suppose lower interest rates suddenly lead to an injection of $325 additional investment spending into the economy and the marginal propensity to consume is 0.80.Complete Table 10.1 by calculating the spending cycles as the increased investment spending works its way through the economy. $\begin{array}{lll}
& \text { Change in this Cycle's } & \text { Cumulative Increase in } \
\text { Spending Cvcles } & \text { Spending and Income } & \text { Spending and Income }\\hline
\text { First-cycle spending }&\$325&\$325\
\text { Second-cvele spending }&\_\_\_&\_\_\_\
\text { Third-cycle spending }&\_\_\_&\_\_\_
\end{array}$

$\text { Table } 10.1$ In Table 10.1,what is the change in the second cycle of spending resulting from the higher initial investment?
A)$65.
B)$1,625.
C)$325.
D)$260.

Question

Suppose lower interest rates suddenly lead to an injection of $325 additional investment spending into the economy and the marginal propensity to consume is 0.80.Complete Table 10.1 by calculating the spending cycles as the increased investment spending works its way through the economy. $\begin{array}{lll} 
& \text { Change in this Cycle's } & \text { Cumulative Increase in } \
\text { Spending Cvcles } & \text { Spending and Income } & \text { Spending and Income }\\hline
\text { First-cycle spending }&\$325&\$325\
\text { Second-cvele spending }&\_\_\_&\_\_\_\
\text { Third-cycle spending }&\_\_\_&\_\_\_
\end{array}$

$\text { Table } 10.1$ In Table 10.1,what is the change in the second cycle of spending resulting from the higher initial investment?
A)$65.
B)$1,625.
C)$325.
D)$260.

Quizplus · Accepted Answer

The change in the second cycle of spending is calculated by multiplying the initial increase in spending ($325) by the marginal propensity to consume (0.80), which results in $260.

Suppose Lower Interest Rates Suddenly Lead to an Injection of $325