The Bureau of Economic Analysis reported that, in real terms, overall consumer spending increased by $335.5 billion
Question:
The Bureau of Economic Analysis reported that, in real terms, overall consumer spending increased by $335.5 billion in 2019.
a. If MPC is 0.50, by how much will real GDP change in response?
b. If there are no other changes to autonomous spending other than the increase in consumer spending in part a, and unplanned inventory investment, IUnplanned , decreased by $100 billion, what is the change in real GDP?
c. GDP at the end of 2019 was $18,638.2 billion. If GDP were to increase by the amount calculated in part b, what would be the percent increase in GDP?
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To solve these questions we can use the expenditureoutput model and the concept of the multiplier Gi...View the full answer
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