Homework Answers
It is normal, when assessing whether the economy is doing well or poorly, to look at the overall income that everyone in the economy receives. Income must be equivalent to expenditure for an economy as a whole because: Each transaction has a buyer and a seller. Each dollar any buyer spends is a dollar of revenue for some seller.
The income of an economy must be equal to its expenditure, since each transaction has a buyer and a seller. Accordingly, buyers' expenses must be equal to sellers' profits. Someone spending one dollar is one dollar of somebody's income.
Gross domestic production is equal to the total expenditure on the economy's output of goods and...
Gross domestic production is equal to the total expenditure on the economy's output of goods and services, but not the total income of everyone in the economy. the total income of everyone in the economy, but not the total expenditure on the economy's output of goods and services. neither the total income of everyone in the economy, nor the total expenditure on the economy's output of goods and services. the total income of everyone in the economy, and the total...
Why must the value of total expenditure equal the value of total income.
Why must the value of total expenditure equal the value of total income.
In 4 to 6 sentences, explain why, when looking at subnational goods and services, government expenditure...
In 4 to 6 sentences, explain why, when looking at subnational goods and services, government expenditure is not equal to the consumption result.
1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple...
1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the nner set of arrows (shown in red) shows the corresponding flow of inputs and outputs Markets for Goods and Services Firms Households Markets for^ Factors of Production Based on this model, households earn income when ms purchase a or and ca tal ▼ n markets for actors of...
1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple...
1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when in markets for factors of production. purchase Suppose Cho earns $750 per week...
2. The circular flow of income and expenditure The income and expenditure approaches to measuring a...
2. The circular flow of income and expenditure The income and expenditure approaches to measuring a nation's GDP can be combined using the circular flow model. Categorize each flow in the following table as part of either aggregate demand or national income. Flow Aggregate Demand National Income Net taxes (NT) O Investment spending (1) Consumption (C) Government purchases (G) OOO Net exports (X - IM) Disposable income (DI) 0 While national income and domestic product must be equal, income must...
Consider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with real income and planned expenditure equal to $100...
Consider two closed economies that are identical except for
their marginal propensity to consume (MPC). Each economy is
currently in equilibrium with real income and planned expenditure
equal to $100 billion, as shown by the black points on the
following two graphs. Neither economy has taxes that change with
income. The grey lines show the 45-degree line on each graph.The first economy's MPC is 0.5. Therefore, its initial planned
expenditure line has a slope of 0.5 and passes through the...
Explain why in perfect competition marginal revenue must equal price.
Explain why in perfect competition marginal revenue must equal price.
2. Algebra of the income-expenditure model Consider a small economy that is closed to trade, so...
2. Algebra of the income-expenditure model Consider a small economy that is closed to trade, so that its net exports are zero. Suppose that the economy has the following consumption function, where C is consumption, Y is income (real GDP), IP is planned investment, G is government purchases, and T is taxes: C = $45 billion+0.75×(Y – T) Suppose G=$60 billion, IP=$60 billion, and T=$20 billion. Given the consumption function and the fact that, in a closed economy, planned expenditure...
1. TRUE/FALSE( 1 mark per question, 20 marks in total) [1) An economy's income is the...
1. TRUE/FALSE( 1 mark per question, 20 marks in total) [1) An economy's income is the same as its expenditure because every transaction has a buyer and a seller. 2) GDP is the market value of all final goods and services produced by a country's citizens in a given period of time. [3) If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125. 14) Other things equal, in countries with higher levels of real...
Gross domestic production is equal to the total expenditure on the economy's output of goods and services, but not the total income of everyone in the economy. the total income of everyone in the economy, but not the total expenditure on the economy's output of goods and services. neither the total income of everyone in the economy, nor the total expenditure on the economy's output of goods and services. the total income of everyone in the economy, and the total...
1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the nner set of arrows (shown in red) shows the corresponding flow of inputs and outputs Markets for Goods and Services Firms Households Markets for^ Factors of Production Based on this model, households earn income when ms purchase a or and ca tal ▼ n markets for actors of...
1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when in markets for factors of production. purchase Suppose Cho earns $750 per week...
2. The circular flow of income and expenditure The income and expenditure approaches to measuring a nation's GDP can be combined using the circular flow model. Categorize each flow in the following table as part of either aggregate demand or national income. Flow Aggregate Demand National Income Net taxes (NT) O Investment spending (1) Consumption (C) Government purchases (G) OOO Net exports (X - IM) Disposable income (DI) 0 While national income and domestic product must be equal, income must...
Consider two closed economies that are identical except for
their marginal propensity to consume (MPC). Each economy is
currently in equilibrium with real income and planned expenditure
equal to $100 billion, as shown by the black points on the
following two graphs. Neither economy has taxes that change with
income. The grey lines show the 45-degree line on each graph.The first economy's MPC is 0.5. Therefore, its initial planned
expenditure line has a slope of 0.5 and passes through the...
1. TRUE/FALSE( 1 mark per question, 20 marks in total) [1) An economy's income is the same as its expenditure because every transaction has a buyer and a seller. 2) GDP is the market value of all final goods and services produced by a country's citizens in a given period of time. [3) If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125. 14) Other things equal, in countries with higher levels of real...
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