Let's say we have the following information about an economy.
C: Consumption spending by households = $800 billion
I: Investment spending by firms=$50 billion
G: Government spending = $200 billion
T: Tax revenue = $190 billion
X: Export spending by foreigners = $80 billion
M: Import spending by domestic residence = $70 billion
MPC: Marginal propensity to consume= 0.80
a. What would be the current level of total expenditure in the economy?
b. If a fall in interest rates resulted in investment expenditure increasing to $100 billion, to what elev. (in dollars) would real GDP rise?