What Condition Must Be Met in Order for Total Spending

question 39

Multiple Choice

What condition must be met in order for total spending to equal total output?

• A) The sum of saving and government purchases must equal the sum of planned investment and net taxes.
• B) The sum of saving and net taxes must equal the sum of planned investment and government purchases.
• C) The sum of saving and planned investment must equal the sum of government purchases and net taxes.
• D) Saving must equal net taxes.
• E) The sum of saving and net taxes must equal planned investment minus government purchases.

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Definitions:

Special Bank Account

A bank account designated for a specific purpose or to handle particular types of transactions, separate from general accounts.

Maturity Value

The amount payable to the holder of a financial instrument at its maturity date.

Note Payable

A written promise to pay a certain amount of money, typically including interest, by a certain date; a form of credit or loan.

360-Day Year

An accounting practice that simplifies interest calculation by assuming a year has 360 days.