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Assume that private consumption is 60% of GDP and private consumption increases 3%. By how much (in percentage terms) will aggregate demand change? Assume that

  1. Assume that private consumption is 60% of GDP and private consumption increases 3%. By how much (in percentage terms) will aggregate demand change?
  2. Assume that private investment is 20% of GDP and private investment increases 5%. By how much (in percentage terms) will aggregate demand change?

Please explain this step by step, i think this has to do with the formula of gdp?

The answer to 1the first is 1.8% and the answer to the second is 1%, please explain clearly why us this happening?

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