Question: Use your completed table for problem 1 to solve this problem. Suppose the wealth effect is such that $10 changes in wealth produce $1 changes

Use your completed table for problem 1 to solve this problem.

Suppose the wealth effect is such that $10 changes in wealth produce $1 changes in consumption at each level of income. If real estate prices tumble such that wealth declines by $80, what will be the new level of consumption and saving at the $340 billion level of disposable income? The new level of saving? LO2

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