Assume taxes are zero and an economy has a consumption function of C is equal to 0.59(YD) + $42.93. Ignoring price effects, by how much would GDP change if net exports change by -27.58?
Added by Kevin P.
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59(YD) + $42.93. Here, C represents consumption and YD represents disposable income. This function tells us that consumption is a linear function of disposable income, with a marginal propensity to consume (MPC) of 0.59 and a constant consumption level of $42.93 Show more…
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