Explain why, in a simple economy which does not include the government or taxation, saving equals investment at the equilibrium level of output
What will be an ideal response?
In this simple economy, the value of output (y) equals the value of income. Households can either consume or save income, so saving equals output minus consumption (S = y - C). In this economy, output equals consumption plus investment (y = C + I). Since y = C + I and S = y - C (or, rewritten, y = C + S), this means C + I = C + S, or saving equals investment (S = I).
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The Illyrian economy has 1000 people in the labor force. 100 people don't have jobs but are searching for work, another 100 people would like to have jobs but quit searching because of poor job prospects, and another 100 people don't work and don't
want to work. What's the rate of unemployment? A) 10 percent B) 20 percent C) 30 percent D) 100 percent E) None of the above.
The Internet auction site eBay is an example of a(n)
A) Sealed Bid Auction. B) Second-Price Auction. C) English Auction. D) Both A and B.