In the text, the equivalence of the goods market equilibrium in the IS model to the equilibrium in which desired investment equals desired saving is demonstrated, assuming that both government purchases and net exports are zero
Demonstrate the equivalence when both G and NX are non-zero.
In terms of output and expenditures, the equilibrium condition is Y = C + I + G + NX. Rearranging terms, Y - C - G = I + NX. For households, saving is Y - T - C. Government saving is T - G. National saving S = Y - T - C + T - G = Y - C - G. Substituting into the equilibrium equation, S = I + NX. Now, the combined saving by households and the government may be greater or less than investment, with the difference made up by a capital outflow (NX > 0 ) or capital inflow (NX < 0 ), respectively.
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All of the following are considered natural resources EXCEPT
A) a redwood forest. B) labor. C) gold. D) a coral reef.
Due to the subjective nature of the questions that would be needed to determine if someone is underemployed or a discouraged worker, adjusting the unemployment rate to accurately reflect these situations
A) is very easy to do. B) is somewhat difficult. C) is impossible. D) Since so few people are actually underemployed or discouraged workers, adjusting the unemployment rate to reflect these situations is considered an unnecessary waste of time.