Economics 2023 – Panasonic Cuts Spending

Subject: Economics    / General Economics
Question
-2-2 http:/ /ezto.mhedu Refer to the "World View" below:
World View: Panasonic Cuts Spending
Panasonic Corporation yesterday announced it is slashing planned investment in two Japanese factories that make
flat-screen TVs. With consumer spending declining in all its major markets, Panasonic decided to cut its
investment by 23 percent over the next three years. The company now plans to invest only 445 billion yen, down
from its earlier target of 580 billion yen – a cut of about $1.5 billion.
Source: News reports, January 8-10, 2009. On the following graphs, illustrate the impact of Panasonic’s changed investment plans as discussed above. Instructions: Click and drag the AD line to a new position to show the change in investment plans. 1.
value:
5.00 points
If every $1,000 increase in the real price of homes adds 7 cents to annual consumer spending (the “wealth effect”), by how much
did consumption decline when home prices fell by $2 trillion in 2006–2008?
Instructions: Enter your response as a whole number.
$ million