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 third year after an expenditure shock is 0.7,what is the total change in output relative to potential for the third year?
A) -1.31%
B) -1.84%
C) -2.68%
D) -3.57%
Correct Answer:
Verified
Correct Answer:
Verified
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