Multiple Choice
Suppose for every dollar change in household wealth,consumption expenditures change by $0.05.If real household wealth declines by $45 billion,potential GDP is $120 billion,and the multiplier effect for the first year after an expenditure shock is 1.4,what is the total change in output relative to potential for the first year?
A) -1.63%
B) -2.63%
C) -2.8%
D) -7.0%
Correct Answer:
Verified
Correct Answer:
Verified
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