Which of the following statements is true regarding leakages and injections?
a. Government transfer payments must equal taxes because one is a leakage and the other is an injection
b. Imports must equal exports since both are leakages.
c. Government purchases, investment, and exports are leakages from the circular flow of income and expenditure.
d. Savings and net taxes are leakages from the circular flow of income and expenditure.
e. Net taxes are an injection into the circular flow, while exports are a leakage.
d
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In Problem 14, do firms enter or exit the market in the long run? What is the market price and the equilibrium quantity in the long run?
What will be an ideal response?
Imagine that the economy is at a point on that is below both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is TRUE?
A) The economy will stay at this level in the short run. B) The exchange rate will first rise to a point on the AA schedule. C) The exchange rate will first rise to a point on the DD schedule. D) The AA-DD equilibrium will shift to the position of the economy. E) The output level will first increase to a position on the DD schedule.
The demand curve faced by a firm with a patent on a marketable product
a. is horizontal b. is vertical c. slopes upward d. slopes downward e. is nonexistent
If actual output exceeds potential output, eventually:
A. both input prices and output will rise. B. input prices will fall and output will rise. C. both input prices and output will fall. D. input prices will rise and output will fall.