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.Table 10.1Spending CyclesChange in this Cycle's Spending and IncomeCumulative Increase in Spending and IncomeFirst-cycle spending$325$325Second-cycle spending________________Third-cycle spending________________In Table 10.1, what is the cumulative increase in expenditure by the end of the second cycle?
A. $585.
B. $260.
C. $65.
D. $390.
Answer: A
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A. 1.25 B. 25 percent C. 20 percent D. 25
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Fill in the blank(s) with the appropriate word(s).
Which of the following equations is correct?
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