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Define gdp

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Question: The real value of the debt (in 1995 dollars) in 1995 was $3.6 trillion and in 1980 was $1.3 trillion. Assume that 50 percent of this buildup in the debt would have gone into investment, so that the capital stock would have been $1.15 trillion larger in 1995. Assume that the capital stock in 1995 was $15 trillion. By how much lower was GDP in 1995 as a result of the displaced investment, if an increase in the capital stock by 1 percent leads to a .2 percent increase in GDP?

Reference no: EM131442421

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