Explain how savings equals investment in a closed capitalist economy?
What will be an ideal response?
The national income identity is given by Y = C + I + G + NX, where, C is the consumption expenditure, I is the investment expenditure, G is the Government Spending, and NX is the net exports. In a closed capitalist economy, Y = C + I. In other words, GDP is the sum of aggregate consumption expenditure and investment. It is also true, that in a closed economy without government spending, all the income generated will be either consumed or saved. Hence, Y = C + S. Since Y = C + S = C + I ? S = I.
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The sale of a used automobile would not be included in GDP of the current year because it is ________.
A. not a market transaction B. not current production C. a private transfer payment D. a purely financial transaction
The equilibrium output produced by a monopolistic competitor in the long run after the entry of new firms is ________
A) higher than the equilibrium output produced by the firm before the entry of new firms B) lower than the equilibrium output produced by the firm before the entry of new firms C) higher than the equilibrium output produced by a perfectly competitive firm in the long run D) equal to the equilibrium output produced by the firm before the entry of new firms
A firm is a natural monopoly if ________
A. it can produce the good at a price below its competitor's price B. it can produce a larger quantity of the good than other firms could C. the government grants it a public franchise or patent D. it can satisfy the market demand at a lower average total cost than other firms can
The mortgage default rate is
a. the percentage of home mortgage loans in which the borrower has failed to make the current monthly payment. b. equal to the foreclosure rate. c. the percentage of home mortgages in which the borrower is 90 days or more late with the payment or it is in the foreclosure process. d. the percentage of home mortgages in which the borrower owes more than the home is worth.