The collective market capitalization of stock in American companies increased from $34 trillion at the end of 2019 to $41 trillion at the end of 2020. Not all of the stock is owned by American consumers but for this problem pretend that it is. If the marginal propensity to consume stock wealth is 0.01 then how much would we expect consumption spending to increase due to the increase in the stock wealth? $ billion

The collective market capitalization of stock in American companies increased from $34 trillion at the end of 2019 to $41 trillion at the end of 2020. Not all of the stock is owned by American consumers but for this problem pretend that it is. If the marginal propensity to consume stock wealth is 0.01 then how much would we expect consumption spending to increase due to the increase in the stock wealth? $ billion

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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