Suppose for every dollar change in household wealth, consumption expenditures change by $0.05. If real household wealth declines by $45 billion, potential GDP is $120 billion, and the multiplier effect for the second year after an expenditure shock is 1.1, what is the total change in output relative to the potential for the second year?

2.062%

Explanation:

The computation of total change in output relative to the potential for the second year is shown below:-

Before that, we need to do the following calculations

Increase in consumption = Change in consumption × Household wealth

= $0.05 × $45  billion

= $2.25

Total output = Potential GDP ÷ Multiplier effect

= $120 billion ÷ 1.1

= $109.09

Total change in output = Increase in consumption ÷ Total output

= $2.25 ÷ $109.09

= 0.02062

= 2.062%

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

answer; purpose nondisclosure;