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Information about an economy

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Reference no: EM131499232

Let's say we have the following information about an economy.

C: Consumption spending by households = $800 billion

I: Investment spending by firms=$50 billion

G: Government spending = $200 billion

T: Tax revenue = $190 billion

X: Export spending by foreigners = $80 billion

M: Import spending by domestic residence = $70 billion

MPC: Marginal propensity to consume= 0.80

a. What would be the current level of total expenditure in the economy?

b. If a fall in interest rates resulted in investment expenditure increasing to $100 billion, to what elev. (in dollars) would real GDP rise?

Reference no: EM131499232

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