Businesses in the nation of Islandia have been accumulating cash because they have a pessimistic outlook of the national economy. Due to recent changes in the economic outlook of Islandia, business leaders have started investing some of their accumulated cash. Instructions: Enter your answers as a whole number. Use a positive number to show an increase and a negative number to show a decrease. a. If business leaders invest a total of $20 billion of accumulated cash, what is the maximum expected change in GDP if Islandia's marginal propensity to consume is 0.6? $ 50 billion b. Suppose that the recent economic outlook in the country of Mountainia has been the opposite. Businesses are instead accumulating cash and postponing planned investments. If business leaders postpone $8 billion of planned investment spending, what is the maximum expected change in GDP if Mountainia's marginal propensity to save is 0.1? $ billion

Businesses in the nation of Islandia have been accumulating cash because they have a pessimistic outlook of the national economy. Due to recent changes in the economic outlook of Islandia, business leaders have started investing some of their accumulated cash. Instructions: Enter your answers as a whole number. Use a positive number to show an increase and a negative number to show a decrease. a. If business leaders invest a total of $20 billion of accumulated cash, what is the maximum expected change in GDP if Islandia's marginal propensity to consume is 0.6? $ 50 billion b. Suppose that the recent economic outlook in the country of Mountainia has been the opposite. Businesses are instead accumulating cash and postponing planned investments. If business leaders postpone $8 billion of planned investment spending, what is the maximum expected change in GDP if Mountainia's marginal propensity to save is 0.1? $ billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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