Suppose in an economy, investment = $40, saving = $50, government spending+export = $100 and taxes+imports = $110 . Then for this economy, total leakages exceed total injections by:
a. $30.
b. $25.
c. $10.
d. $45.
e. $20.
e
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Demand is said to be inelastic when
A. the absolute value of the price elasticity of demand exceeds 1. B. an increase in price results in a reduction in total revenue. C. a reduction in price results in an increase in total revenue. D. a reduction in price results in a decrease in total revenue.
Data on productivity gains in the 1990s in the United States strongly suggest that a significant share of those gains was attributable to:
A) improvements in education and training. B) improvements in information technology. C) substantial reductions in labor costs. D) increased demand for goods and services.
In the above figure, when price is below E, this firm should
A) lower prices. B) continue to operate as-is. C) attempt to lower ATC and to raise AVC. D) shut down.