By how much must consumption decline for this to occur

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Reference no: EM13978262

Suppose that every additional 6.0 percentage points in the investment rate (I ÷ GDP) boost economic growth by 1 percentage point. Assume also that all investment must be financed with consumer saving. The economy is now characterized by GDP: $10 Trillion Consumption: 9 Trillion Savings: 1 trillion Investments: 1 trillion. If the goal is to raise the growth rate by 1 percent, a) By how much must investment increase? $ billion b) By how much must consumption decline for this to occur? $ billion

Reference no: EM13978262

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