Question

Given a scenario, calculate the potential change in real disposable income, given an autonomous change in C, I, G, or X.

Answer 1

Y= C+I+G+(X-M)

An increase in consumer spending will increase real GDP and vice versa

Similarly an increase in investment spending and government spending will increase real GDP and decrease in investment spending and government spending will decrease real GDP

Increase in exports leads to increase in real GDP while increase in imports leads to fall in real GDP vice versa. Increase in Net export increases Real GDP whila decrease in net export decreases real GDP.

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