My bad... poor wording on problem 7

Problem 7 should really read as follows.

7. (Mankiw, p. 483, problem 8 modified) Suppose the government increases military spending by $20 billion. The marginal propensity to consume is 0.85.

A. What is the initial effect of the spending increase on aggregate spending?

B. What additional effects follow this initial effect (calculate the next two effects)? What is the total effect? (Assume no crowding out. Use the example on pages 470-471.)

the handout says "tax reduction" instead of "spending increase". But that doesn't really make sense. My bad. My apologies.

Here's an exerpt from an IM

CinciDood: look at the example in the text book...
CinciDood: first effect is the spending of $20
CinciDood: the second is 20 x 0.85 = 17
CinciDood: the third is 17 x .85 = 14.45
CinciDood: and it goes on and on infinitely
CinciDood: the sum of all of those, 20 + 17 + 14.45 + all the others in the infinite sum is...
CinciDood: 20 x (1/(1-b))