How are total output and total income related to each other, and why?
What will be an ideal response?
The value of total output must equal the value of total income. This is demonstrated by the circular flow. In a closed economy, the income earned by households, businesses, and government is spent in the marketplace in the form of consumption, investment, and government expenditure. This spending creates additional GDP, and the circular flow continues.
You might also like to view...
The marginal revenue curve facing a monopolistically competitive firm
A) lies on its demand curve. B) lies above its demand curve. C) lies below its demand curve. D) is equal to its price curve. E) is parallel to its demand curve.
In 1886, what did the U.S. Supreme Court rule in Wabash, St. Louis, and Pacific Railway v Illinois?
(a) Only the federal government could regulate commerce across states. (b) Only the states had the right to regulate commerce across states. (c) Neither the federal or state governments had the right to regulate across states. (d) Railroads were not subject to any government regulation, state or federal.
Adrian's total utilities of two consumption bundles are 50 and 100. This implies that
A) Adrian prefers the first bundle. B) Adrian prefers the second bundle. C) Adrian likes the second bundle twice as much. D) Adrian likes the first bundle twice as much.
In this graph for the marginal costs and benefits of pollution controls, the amount spent for pollution control greatly outweighs the benefits at ______.
a. Q1
b. Q2
c. Q*
d. both Q1 and Q2