which-of-the-following-best-illustrates-the-repeated-rounds-of-spending-and-earn

Question

Which of the following best illustrates the repeated rounds of spending and earning triggered by a $1 billion government expenditure with an MPC of 0.8?

Accepted Answer

Initial $$1 billion -\u003e 0.8 $$billion -\u003e $$0.64 billion -\u003e 0.512 $$billion, and so on.

Answer

Initial $$1 billion -\u003e 0.2 $$billion -\u003e $$0.04 billion -\u003e 0.008 $$billion, and so on.

Answer

Initial $$1 billion -\u003e 1.2 $$billion -\u003e $$1.44 billion -\u003e 1.728 $$billion, and so on.

Answer

Initial $$1 billion -\u003e 0.5 $$billion -\u003e $$0.25 billion -\u003e 0.125 $$billion, and so on.

Which of the following best illustrates the repeated rounds of spending and earning triggered by a \$1 billion government expenditure with an MPC of 0.8?