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Congress is considering a tax credit program




500?700 words + calculations;Details: Congress is considering a tax credit program for those who purchase energy-efficient appliances. Proponents of the program have said that $400 million will be given directly to taxpayers and argue that this will have an economic effect that is greater than the original $400 million spent because of the multiplier effect. Many voters and taxpayers are not familiar with the concept of a multiplier in this sense. Your think tank has decided to produce a short report that will help voters better understand the proponents? claims, and Gabe has asked you to write this report.;Be sure to include the following in your report;Give a basic explanation of how the multiplier concept is computed, including MPC.;Assume that the average American?s marginal propensity to consume (MPC) is 2/5, and American producers? MPC is also 2/5.;Calculate the following, explaining how you arrived at each result;The amount consumers will spend on new consumption;The amount of new spending from producers;The multiplier in this case;The total increase in spending from the primary spending of $400 million;Explain the multiplier concept as it applies in this case.;What are the qualifications and limitations of the multiplier model?;Please submit your assignment.


Paper#28933 | Written in 18-Jul-2015

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