Suppose output is $35 billion, government purchases are $10 billion, desired consumption is $15 billion, and desired investment is $6 billion. Desired savings is equal to
A) $2 billion.
B) $10 billion.
C) $14 billion.
D) $16 billion.
B
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
An inverted yield curve predicts that short-term interest rates
A) are expected to rise in the future. B) will rise and then fall in the future. C) will remain unchanged in the future. D) will fall in the future.
According to revealed preference a consumer that chooses to smoke cigarettes:
A. derives more utility from smoking than the goods they could have purchased with that same money. B. derives more happiness from smoking than the goods they could have purchased with that same money. C. is minimizing their utility given the options available to them. D. is behaving irrationally.
Subsidies are payments made by the government of a country to:
a. foreign firms to encourage imports from the country in question. b. foreign firms to boost their exports. c. domestic firms to encourage exports. d. domestic firms to encourage imports. e. domestic consumers to encourage consumption of imported goods.