Suppose that in one year household consumption falls by $20 billion (compared to the year before), but

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Suppose that in one year household consumption falls by $20 billion (compared to the year before), but business firms continue to produce consumer goods at an unchanged rate. If there is no other change affecting real GDP that year, what will happen to total real GDP? What will happen to each of its components?

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Macroeconomics Principles and Applications

ISBN: 978-1111822354

6th edition

Authors: Robert E. Hall, Marc Lieberman

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