Final answer:
The multiplier effect in economics determines how much an initial increase in spending in an economy will impact the overall GDP. In this scenario, a change in spending of $100 resulted in a change in GDP of $213, giving a multiplier of 2.13. To increase consumer spending by $200 billion, it would take approximately $93.9 billion worth of spending cycles.
Step-by-step explanation:
The multiplier effect in economics determines how much an initial increase in spending in an economy will impact the overall GDP. The formula to calculate the multiplier is the change in GDP divided by the change in spending. In this scenario, a change in spending of $100 resulted in a change in GDP of $213, giving a multiplier of 2.13.
To determine how many spending cycles would occur before consumer spending increased by $200 billion, we can set up the following equation:
Change in GDP = Change in Spending * Multiplier
$200 billion = Change in Spending * 2.13
Through simple algebra, we can find that the change in spending required is:
Change in Spending = $200 billion / 2.13
Change in Spending = $93.9 billion
Therefore, it would take approximately $93.9 billion worth of spending cycles to increase consumer spending by $200 billion.