Answer & Explanation:
a. MPC = 0.50; Change in consumption spending = $345.8 billion
According to multiplier formula,
Change in real GDP/ Change in consumption spending = 1/(1-MPC) = 1/(1-0.5) = 1/0.5 = 2
So, Change in GDP = Change in consumption spending*2 = (345.8)*2 = $691.6 billion
Change in GDP = $691.6 billion
b. Change in investment = -$100
According to multiplier formula,
Change in real GDP/ Change in investment = 1/(1-MPC) = 1/(1-0.5) = 1/0.5 = 2
So, Change in GDP = Change in investment*2 = (-100)*2 = -200
So, total change in GDP = 691.6 - 200 = $491.6 billion
Change in real GDP = $491.6 billion
c. Percentage change in real GDP = (Change in Real GDP/GDP at the end of 2014)*100 = (491.6/15,982.3)*100 = 3.08%