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congress is considering a tax credit program




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 thi 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 multilier concept is computed, including MPC..Assum 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 ammount 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?


Paper#30701 | Written in 18-Jul-2015

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