In a closed economy, national savings is:
A. equal to national investment.
B. the sum of the savings of individuals and corporations plus the savings of the government.
C. the sum of public savings plus private savings.
D. All of these are true.
Answer: D
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Suppose we observe people buying more of a good even though its price has risen. What would an economist conclude?
A) Impossible! We will never observe prices and quantity simultaneously rising in the real world. B) The demand curve for the good must be upward-sloping. C) The law of demand doesn't hold. D) The demand curve has shifted to the right. E) Consumption increasing as prices increase only occurs when a good is needed for survival.
When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence?
a. Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. b. Gas station owners are attempting to repeal the laws of supply and demand. c. Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost. d. A decline in consumer demand generally causes gas station owners to raise their prices.
Which of the following terms is used to describe a situation in which the price of an asset rises above what appears to be its fundamental value?
a. "random walk" b. "random bubble" c. "speculative bubble" d. "speculative hedge"
Suppose the money supply equals $100 million, the average price level equals 40, and real GDP equals $50 million. Given this information, the velocity of money equals:
What will be an ideal response?