When the aggregate expenditures function of a closed economy is plotted against real GDP, any point on the 45-degree line represents C + I + G = Y, where C = Consumption, I = Investment, G = Government spending, and Y = Real GDP

When the consumer spends a large portion of her income on a good, demand will be

A) elastic. B) unit-elastic. C) inelastic. D) elastic, unit-elastic or inelastic depending upon supply.

When individuals and businesses are permitted to trade freely over a larger market area,

a. wages will decline to the level of the poorest country in the region. b. the monopoly power of business firms will increase. c. they will be able to produce a larger output and consume a more diverse bundle of goods. d. businesses will be able to earn higher profits, but the income levels of individuals will decline.