____ 7. When money is spent on goods and services, those that receive the money also spend some of it.
The people receiving some of the twice-spent money will spend some of that, and so on.
Economists call this chain reaction the multiplier effect. In a hypothetical isolated community, the
local government begins the process by spending D dollars. Suppose that each recipient of spent
money spends and saves of the money that he or she receives. The values c and s
are called the marginal propensity to consume and the marginal propensity to save and, of course,
.
The number k = 1/s is called the multiplier. What is the multiplier if the marginal propensity to
consume is ?
Select the correct answer.
a. 4
b. 3
c. 6
d. 7
e. 10
8. Find the sum of the series.
9. Find an approximation of the sum of the series accurate to two decimal places.
____ 10. Determine which series is convergent. Select the correct answer.
a.
b.
11. Approximate the sum to the indicated accuracy.
(five decimal places)