In the simplified circular flow diagram, leakage can occur when consumers save some income

Distinguish between fiscal imbalance and generational imbalance

What will be an ideal response?

Understanding the distinction between positive and normative economic statements is important because it

a. enables us to derive better forecasts of macroeconomic aggregates such as GDP b. explains why economics is not a physical science c. is the primary distinction between macroeconomics and microeconomics d. provides a framework for understanding differences among economists e. enables us to see the rationale behind economic models