When the economy is operating at the equilibrium level of GDP, we know that
A. planned real investment spending equals real net exports of zero.
B. total planned real consumption expenditures equal real GDP.
C. real net exports equal inventory changes.
D. total planned real expenditures equal real GDP.
Answer: D
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Assume that a security has equally possible outcomes of yielding 8 percent and 4 percent. The standard deviation of the probability distribution of returns for this security is
A) 6 percent. B) 4 percent. C) 3 percent. D) 2 percent.
Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country A should specialize in __________________ because they possess the ___________________ in the production of that good.
A. bananas; comparative advantage B. tomatoes; comparative advantage C. bananas; absolute advantage D. tomatoes; absolute advantage
Which of the following reduce the incentive for households to save?
a. both means-testing of government benefits and inheritance taxes b. means-testing of government benefits but not inheritance taxes c. inheritance taxes, but not means-testing of government benefits d. neither means-testing of government benefits nor inheritance taxes
A primary financial market is:
A. a market where U.S. Treasury bonds are traded. B. one that can only deal in the highest investment grade securities. C. one where the borrower obtains funds directly from the lender for newly issued securities. D. located only in New York, London, and Tokyo but can handle transactions anywhere in the world.