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Assume that the MPC is .75 and that, for each of the following, the values of the initial variables are those you just discovered. Determine the new value of GDP if, other things equal, (a) investment increased by 5 percent, (b) imports increased by 5 percent while exports increased by 5 percent, (c) consumption increased by 5 percent, and (d) government spending increased by 5 percent. Create a table showing both the origional values and the new values you have find outd. Which of the changes, (a) through (d), cause the greatest change in GDP in absolute dollars?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M955056

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