The budget constraint represents:
a. all possible consumption combinations of goods that someone can afford when all income is spent.
b. a single consumption combination of goods that someone can afford when all income is spent.
c. all possible consumption combinations of goods that someone can afford when disposable income is spent.
d. all possible consumption combinations of goods that society can afford when all income is spent.
a. all possible consumption combinations of goods that someone can afford when all income is spent.
The budget constraint represents all possible consumption combinations of goods that someone can afford when all income is spent.
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Which of the following best describes the crowding-out effect?
a. An increase in government expenditures will cause taxes to rise, which will reduce both aggregate demand and output. b. An increase in borrowing by the government will push interest rates upward, which will lead to a reduction in private spending. c. An increase in borrowing by the government will decrease the money supply and, thereby, reduce aggregate demand. d. An increase in government expenditures will cause the general level of prices to fall and, thereby, reduce aggregate demand and output.
Calculate GDP for a country with investment of $2 trillion, government purchases of $3 trillion, capital depreciation of $1.5 trillion, consumption of $10 trillion, exports of $3.4 trillion, and imports of $3.9 trillion