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Suppose that every additional 3 percentage points in the investment rate boosts GDP growth by 1 percentage point. Assume also that all investment must be

Suppose that every additional 3 percentage points in the investment rate boosts GDP growth by 1 percentage point. Assume also that all investment must be financed with consumer saving.

Investment rate = investment GDP.

The economy is now characterized by.

Consumption: $ 6 trillion
Saving (= Investment): $ 1 trillion
GDP: $ 7 trillion

Instructions: Enter your responses as a whole number.

If the goal is to raise the growth rate by 1 percentage point,

  1. by how much must investment increase?

$ billion

  1. by how much must consumption decline?

$ billion

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