In the Simple Macro Model That Is Considered in Chapters

question 43

Multiple Choice

In the simple macro model that is considered in Chapters 21 and 22 of the textbook,

• A)the economy is always in equilibrium.
• B)there is no government or foreign trade.
• C)the price level is determined within the model.
• D)there are no supply-side influences on national income.
• E)the simple multiplier is always equal to 1.

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Definitions:

Annually

Relating to something that happens once a year.

Variable Costs

Costs that vary directly with the level of production or sales volume; they rise as production increases and fall as production decreases.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain scale.

Net Working Capital

A liquidity calculation that represents the difference between a business's current assets less its current liabilities, highlighting operational efficiency and short-term financial health.