A microeconomy
What will be an ideal response?
is in an equilibrium situation when output, income, and spending are all in balance—when they are linked in an unbroken chain, each supported by the other at the equilibrium level, as illustrated in Figure 9.5
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The production possibilities frontier separates ________
A) the goods and services that people want from those that they do not want B) the types of goods that can be attained from those that can't be attained C) the quantities of goods and services that can be produced from those that cannot be produced D) the combinations of goods that people value and those that they don't
The production decisions of perfectly competitive firms follow one of the Ten Principles of Economics, which states that rational people
a. consider sunk costs. b. equate prices to the average costs of production. c. prefer to purchase products from smaller rather than larger firms. d. think at the margin.
Refer to the diagram for a private closed economy. In this economy, aggregate expenditures:
A. do not change as GDP increases.
B. increase by $2 for every $5 increase in GDP.
C. increase by $2 for every $4 increase in GDP.
D. increase by $2 for every $3 increase in GDP.
The aggregate demand curve:
A. shows the relationship between the overall price level and the level of total demand. B. shows the price level on the horizontal axis and output on the vertical axis. C. is upward-sloping, which is counter to the individual demand curve. D. shows the relationship between the price of goods and services and the level of total demand.