At each of the three points in the following graph, indicate whether planned aggregate expenditure is greater than, equal to, or less than GDP?
What will be an ideal response?
At point J, planned aggregate expenditure is greater than GDP.
At point K, planned aggregate expenditure is equal to GDP.
At point L, planned aggregate expenditure is less than GDP.
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How would an increase in cigarette taxes succeed according to the following criteria: collecting a large amount of tax revenue; distorting demand as little as possible; discouraging consumption of harmful commodities?
An externality is
a. the costs that parties incur in the process of agreeing and following through on a bargain. b. the uncompensated impact of one person's actions on the well-being of a bystander. c. the proposition that private parties can bargain without cost over the allocation of resources. d. a market equilibrium tax.
In the long run when average total cost does not depend on the quantity of output, this is called:
A. economies of scale. B. constant economies to scale. C. diseconomies of scale. D. minimum average total cost.
When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold, the tax has
a. increase efficiency b. reduced the price buyers pay c. generated no tax revenue d. caused a deadweight loss