Exercise 5.2 · Q20
Q.Due to reduced taxes an individual has an extra ₹30,000 in spendable income. If we assume that the individual spends 70% of this on consumer goods, and the producers of these goods in turn spend 70% on consumer goods, and this process continues indefinitely, what is the total amount spent on consumer goods?
Puducherry CbseNCERTSubjective· 2mImportance★★★★★est
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Start your 14-day free trial to unlock the full solution →The chain of spending is an infinite GP with and ; total consumer spending sums to ₹70,000.
[!FORMULA] , valid for
= first term (first round of spending), = common ratio (fraction re-spent each round).
- Extra income . First round of consumer spending of . This is the first term: . …
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