Question
The increase in disposable income in the second round will lead to additional spending. The part of this additional spending that will fall on domestic
The increase in disposable income in the second round will lead to additional spending. The part of this additional spending that will fall on domestic products in that round will generate further income for domestic firms and will entail a third round of effects, causing increased disposable income, spending, imports, etc. Similarly, there will be fourth, fifth, ... rounds of income and spending increase. The following table provides a method of organizing the information about these rounds, up to round 12 when the marginal increases become negligible compared to the initial stimulus.
Assume that in each round, the spending, import, and tax shares will remain the same as described above. Calculate the increases in the variables listed in the columns of Table 1 for each listed round. Please round your table entries to display two decimal points.
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