Assume That an Economy Is in Equilibrium with a Budget

question 7

Multiple Choice

Assume that an economy is in equilibrium with a budget deficit of $130 billion, positive net exports of $453 billion, and savings equal to $1,550 billion. If taxes are zero, then planned investment spending must be equal to:

• A) $1,550 billion.
• B) $130 billion.
• C) $1,873 billion.
• D) $1,227 billion.
• E) $967 billion.

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Definitions:

Marginal Utility

Marginal utility represents the additional satisfaction or benefit a consumer gains from consuming one more unit of a good or service.

Total Utility

The overall satisfaction or value a consumer derives from consuming a certain quantity of goods or services.

Total Utility

Full contentment gained from the intake of a particular total volume of a good or service.

Marginal Utility

The additional satisfaction or utility that a consumer experiences from consuming one more unit of a good or service.