Refer to the above figure. Point B is known as

The free-rider problem with a public good leads to

A) inefficiency if the good is provided by only private markets with no government action. B) overproduction if the good is provided by private markets. C) underproduction if the good is provided by the government. D) None of the above answers is correct.

The income-expenditure identity is best paraphrased as

A) all spending generates income. B) all profits are used for investment spending. C) on average, consumers cannot save. D) on average, government can spend no more than what it collects in income taxes.