A) spend all of their income.
B) divide their income among spending,taxes,and saving.
C) buy all goods and services produced in the economy.
D) Both (a) and (c) are correct.
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A) pay wages to workers.
B) pay rent to landlords.
C) pay profit to the firms' owners.
D) All of the above are correct.
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A) GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy's labor force.
B) Money continuously flows from households to government and then back to households,and GDP measures this flow of money.
C) GDP is to a nation's economy as household income is to a household.
D) All of the above are correct.
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C
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A) income falls and saving rises.
B) income and saving both fall.
C) income falls and expenditure rises.
D) income and expenditure both fall.
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A) can be computed as payments firms make to factors of production plus revenues they receive from the sales of goods and services.
B) can be computed as the revenue firms receive from the sales of goods and services minus the payments they make to factors of production.
C) can be computed as either the revenue firms receive from the sales of goods and services or the payments firms make to factors of production.
D) can be computed as the payments firms make to factors of production,but not as revenues they receive from the sales of goods and services.
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A) income rises and saving falls.
B) income and saving both rise.
C) income rises and expenditure falls.
D) income and expenditure both rise.
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A) household spending exceeds their incomes.
B) household expenditures on goods and services falls short of GDP,since household save for the future.
C) household expenditures include only goods,since services are intangible and cannot be measured accurately.
D) household expenditures on goods and services are made using borrowed funds.
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A) income must be greater than expenditure.
B) unemployment must rise when GDP rises.
C) expenditure must equal income.
D) consumption must be greater than investment.
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A) income.
B) income + saving.
C) income - government expenditures.
D) income - imports.
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A) never equal because total income always exceeds total expenditure.
B) seldom equal because of the ongoing changes in an economy's unemployment rate.
C) equal only when the government purchases no goods or services.
D) always equal because every transaction has a buyer and a seller.
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A) wages must equal profit.
B) consumption must equal income.
C) income must equal expenditure.
D) consumption must equal saving.
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A) households,but not firms or the government.
B) households and firms,but not the government.
C) households and the government,but not firms.
D) households,firms,and the government.
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D
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A) as the total payments for factors of production made by households.
B) as the total expenditures by households on goods but not services,since services are intangible.
C) as the total expenditures by households on goods and services.
D) as the total expenditures by households on goods and services,less taxes paid.
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A) the market value of production must equal expenditure.
B) investment must equal the value of stocks and bonds purchased.
C) wages must equal income.
D) consumption must equal saving.
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A
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A) are less than its domestic production.
B) are equal to its domestic production.
C) are greater than its domestic production.
D) could be less than,equal to,or greater than its domestic production.
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A) purchase resources from households.
B) purchase the output produced by households.
C) receive income by selling resources to households.
D) All of the above are correct.
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A) can be computed as the total income paid by firms or as expenditures on final goods and services.
B) can be computed as the total income paid by firms,but not as expenditures on final goods and services.
C) can be computed as expenditures on final goods and services,but not as the total income paid by firms.
D) cannot be computed as either total income paid by firms or expenditures on final goods and services.
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A) GDP is more closely associated with an economy's income than it is with an economy's expenditure.
B) every transaction contributes equally to an economy's income and to its expenditure.
C) the number of firms must be equal to the number of households in a simple circular-flow diagram.
D) firms' profits are necessarily zero in a simple circular-flow diagram.
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A) income and saving fall.
B) income and market value of all production both fall.
C) income falls and market value of all production rises.
D) income rises and market value of all production falls.
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A) households spend all of their income.
B) all goods and services are bought by households.
C) expenditures flow through the markets for goods and services,while income flows through the markets for the factors of production.
D) All of the above are correct.
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