The Spending Allocation Model Allows Economists to Determine How GDP

question 56

Multiple Choice

The spending allocation model allows economists to determine how GDP is allocated among the major components of spending, which are

• A)income, consumption, and savings.
• B)consumption, savings, government purchases, and net exports.
• C)consumption, investment, government purchases, and net exports.
• D)consumption, savings, taxes, and net exports.
• E)None of these

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Definitions:

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of a product.

Output

The total amount of goods or services produced by a company, industry, or economy within a specific period.

Additional Unit

Referring to the next or extra unit of a product or service to be produced or consumed, often used in analyses of costs and benefits.

Perfectly Competitive

Describes a market situation where firms sell identical products, there are no barriers to entry or exit, and no single buyer or seller can influence the market price.