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Mathematics, 01.06.2021 01:00 Victor3756

When money is spent on goods and services, those who 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 100c% and saves 100s% 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, course, c + s = 1. Let Sn be the total spending that has been generated after n transactions. Required:
Find an equation for Sn.

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