Multiplier Effect Sometimes a city will argue that having

Chapter , Problem 8.3.80

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Multiplier Effect Sometimes a city will argue that having a professional sports franchise in the city will contribute to economic growth. The rationale for this statement is based on the multiplier effect. Suppose a city estimates that a professional sports franchise will create $50 million of additional income and that a person receiving a portion of this money will spend 90% and save 10%. Assuming the multiplier effect model is accurate, what is the net effect of the $50 million? (See pages 622623.)

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