The government has decided to give a $1,000 tax rebate to each household in order to stimulate the economy. The government statistics say that each household will spend 90% of the rebate in goods and services. The businesses and individuals who benefited from that 90% will then spend 90% of what they received and so on.

What is the total effect of the rebate on the economy?

What will the total effect be if the rebate is $5000 to each household in order to stimulate the economy if each household will spend 90% of the rebate in goods and services?

Question

10-09-2020
Mathematics

contestada

The government has decided to give a $1,000 tax rebate to each household in order to stimulate the economy. The government statistics say that each household will spend 90% of the rebate in goods and services. The businesses and individuals who benefited from that 90% will then spend 90% of what they received and so on.

What is the total effect of the rebate on the economy?

What will the total effect be if the rebate is $5000 to each household in order to stimulate the economy if each household will spend 90% of the rebate in goods and services?

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Answer:

1.) The total effect of 90% of the $1,000 tax rebate would be 10,000 growth in the economy. Second question, the total effect of 90% of $5,000 would be 50,000 in growth in the economy. *Same concept different amount.

Step-by-step explanation:

1. S=[tex]\frac{a_1{} }{1-R}[/tex] 2. S=[tex]\frac{a_{1} }{1-R}[/tex]

S=[tex]\frac{1000}{1-0.9}[/tex] S=[tex]\frac{5,000}{1-0.9}[/tex]

S= 10,000 S=50,000

I hope this helps.