LO10-24. Suppose that investment demand increases by $200 billion and no leakages occur except household saving. Assume further that households have a marginal propensity to consume of 75 percent.

(a) Compute four rounds of multiplier effects:

(b) What will be the final cumulative impact on spending?

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First cycle Second cycle Third cycle Fourth cycle Changes In This Cycle's Spending Cumulative Change In Spending