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 $45 million of additional income and that a person receiving a portion of this money will spend 80% and save 20%. Assuming the multiplier effect model is accurate, what is the net effect of the $45 million? Round to the nearest hundred thousand.
A)$450.0 million
B)$225.0 million
C)$281.3 million
D)$262.5 million
E)$356.3 million

Question

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The Answer of 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 $45 million of additional income and that a person receiving a portion of this money will spend 80% and save 20%. Assuming the multiplier effect model is accurate, what is the net effect of the $45 million? Round to the nearest hundred thousand.
A)$450.0 million
B)$225.0 million
C)$281.3 million
D)$262.5 million
E)$356.3 million

Sometimes a City Will Argue That Having a Professional Sports