Question: Suppose that consumer spending initially rises by $5 balion for every 1 percent rise in household wealth and that investment spending initially rises by $20

 Suppose that consumer spending initially rises by $5 balion for every

Suppose that consumer spending initially rises by $5 balion for every 1 percent rise in household wealth and that investment spending initially rises by $20 bilion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is 4 . Instructions: Enter your answers as a whole number. a. If household weolth falls by 5 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? Aggregate demand will initially shift by $ (c) billion. b. In what direction and by how much will it eventually shift? Aggregate demand will eventually shift by s billion

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