At the equilibrium level of income, it must be true that total
A. income equals total spending.
B. product equals total output.
C. output equals total inventory.
D. income equals total saving.
Answer: A
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Assume the supply curve of labor has the usual shape. If the wage rate is $10, 1,000 carpenters are willing to supply their labor. If the wage rate increases to $20, the
a. quantity supplied of labor will be more than 1,000 b. quantity supplied of labor will be less than 1,000 c. labor supply curve shifts to the right d. labor supply curve shifts to the left e. same amount of carpentry labor will be supplied
You are the manager of a theater. At present the theater charges the same admission price of $8 to all customers, regardless of age. You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults. You tell your supervisor
that your proposal is likely to increase revenue. What must be true about the price elasticity of demand if your proposal is to achieve its goal of raising revenue? Explain your answer. What will be an ideal response?
The so-called ratchet effect refers to the characteristic in the economy where product prices, wages, and per-unit production cost are flexible when:
A. AD decreases but not when AD increases B. AD increases but not when AD decreases C. AS increases but not when AS decreases D. AD shifts but not when AS shifts
The relationship between the market system and private property is
a. as the market system expands, private property declines in that society. b. private property rights interfere with the operation of the market system. c. the market system functions best when the rights of private property are protected. d. None of these.