In an Open Economy with Government and Demand- Determined Output

question 24

Multiple Choice

In an open economy with government and demand- determined output, an increase in the equilibrium level of national income could be caused by

• A)a decrease in desired consumption at all levels of income.
• B)a decrease in the desired level of saving at all levels of income.
• C)a decrease in government purchases.
• D)an increase in the desired level of imports at all levels of income.
• E)an increase in taxes at all levels of income.

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Definitions:

Paper Money

Currency issued by a government or central bank in the form of paper notes and used as legal tender for transactions.

Goldsmiths

Historically, craftsmen who made and traded gold items, but also pivotal in the development of banking as they stored and lent money.

Gold Standard

An economic system where a fixed amount of gold serves as the standard unit of currency.

Branch Banking

Refers to a banking system where a single bank operates multiple outlets or branches, providing a range of banking services in different locations.