Business, 02.07.2020 20:01 hickslily9

Suppose the following list of events describes all of the economic activity resulting from an increase in government spending. Suppose that at each step after the initial one, the marginal propensity to consume is 0.77 and the tax rate is 13%. Step 0. The government spends $5500 on meat to host a very large dinner for foreign diplomats.
Step A. The butcher takes the income earned by selling the meat saves some and spends the rest on a wedding cake for his daughter.
Step B. The baker who produced the wedding cake saves some of her earnings and uses the rest to purchase beautiful candlesticks as gifts for all of her friends.
Step C. The local candlestick maker saves some of his revenue for retirement and spends the rest on building materials to improve his house.

Required:
a. How much does the candlestick maker earn for selling the candlesticks?
b. How much does the candlestick maker spend on building materials?

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