Because Production Generates Income Which, in Turn, Generates Expenditure, It

question 140

Multiple Choice

Because production generates income which, in turn, generates expenditure, it is true that:

• A) it is not possible to charge taxes on either expenditure or income without disrupting macroeconomic equilibrium.
• B) the magnitude of government budget deficits is equal to the magnitude of trade deficits, albeit with the opposite sign.
• C) both the income and production approaches to measuring macroeconomic activity should yield the same results.
• D) corporate profits can not be larger than the income paid to households for the rental of their capital.

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good varies as the volume of production increases.

Industry Supply Curve

A graphical representation showing the total quantity of a good or service that businesses in an industry are willing to sell at various price levels.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good varies as the quantity of production increases.

Industry Supply Curve

A graphical representation that shows the relationship between the price of a good and the total output of the industry over a range of prices.