Suppose for every dollar change in household wealth, consumption expenditures change by $0.05. If real household wealth declines
by $45 billion, potential GDP is $120 billion, and the multiplier effect for the second year after an expenditure shock is 1.1, what is the total change in output relative to the potential for the second year?
You must distribute first. 8 times (3x-2)= 24x-16 2 times (12x-5.5)= 24x-11 What you have left is (24x-16)-(24x-11) 24x-24x=0 -16- -11=-5 The answer is -5
