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andrew-mc [135]
2 years ago
13

Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment sp

ending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. also assume that the economy’s multiplier is 3.
a. if household wealth falls by 4 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level?
Business
1 answer:
Ivan2 years ago
3 0
It will rise $80 billion if the household wealth falls by 4 percent.
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