Suppose U.S. consumers become more cautious, and as a precautionary measure, increase their saving and decrease their demand for final goods and services by $250bn. Suppose the marginal propensity to consume is 0.90 and the marginal propensity to import is 0.2. Compute the immediate change in real GDP in the United States. MPS 3. Suppose an increase in income in Europe leads to an increase in demand for U.S. exports to Europe by $300bn. U.S. workers and business owners experience an increase in income, of which they put about 10% towards saving and 15% towards purchasing imported goods. Compute the immediate change in real GDP in the United States. MPM = 0.15 MPS = .10

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