Economics
5th Edition
ISBN: 9781319066604
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Chapter 26, Problem 5P
To determine
a.
The effect of change in marginal propensity on the real
Introduction: Gross domestic product is used to measure the total value of all the goods as well as the services produced in an economy in a given period of time.
Formula to calculate the GDP in a closed economy is:
Where,
➢ GDP is gross domestic product.
➢ Iunplanned is the unplanned investment.
➢ Iplanned is the planned investment.
To determine
b.
Effect of increase in consumer spending (C) and decrease in unplanned investment (Iunplanned) on the real Gross Domestic Product (GDP).
To determine
c.
The percentage increase in GDP from the end of 2014 to the change in GDP of $491.6 billion given above.
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