Question
Suppose the government is making a $\$ 13,000,000,000$ expenditure to stimulate the economy. If $85 \%$ of this is spent again, and so on, what is the total effect on the economy?
Step 1
The government is spending an initial amount of $13,000,000,000 and then 85% of that amount is spent again and again. This forms a geometric series where the first term (a) is $13,000,000,000 and the common ratio (r) is 0.85. Show more…
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