Total government spending (federal, state, and local) sums to approximately
a. 10 percent of the U.S. economy.
b. 20 percent of the U.S. economy.
c. 40 percent of the U.S. economy.
d. 50 percent of the U.S. economy.
C
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Answer the following statements true (T) or false (F)
1. The circular flow of income does not take into consideration nonprofit institutions. 2. The total payment of resource income in the economy is equal to the value or cost (including profit) of the output. 3. GDP is not only the value of total output, but it also indicates the total spending of consumers, businesses, governments, and international traders on these goods and services. 4. The circular flow represents the total level of output and income. 5. In the circular flow, services rendered by the resource owners are compensated through payments of wages, rent, interest, and profits.
Suppose an economist is analyzing the impact of a debt and its ability to be paid. That economist will focus on
A. both the ratio of the debt to GDP and the interest payments as a percentage of GDP. B. strictly the debt. C. strictly the ratio of the debt to GDP. D. strictly the inflation-adjusted amount of debt.