When the Economy Is in Macro Equilibrium

question 38

Multiple Choice

When the economy is in macro equilibrium,

• A) the sum of savings plus investment must equal the sum of imports plus exports.
• B) the sum of savings plus imports plus taxes must equal the sum of investment plus government purchases plus exports.
• C) the sum of savings plus government purchases must equal exports minus imports.
• D) the government's budget must be in balance.

Identify the first and last steps in the problem-solving process.

Describe how concepts facilitate generalization and impact decision-making.

Explain the distinction between heuristics and algorithms in problem-solving.

Recognize the importance of inductive reasoning in forming general rules and concepts.

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Definitions:

Exchange Rate

The price of one country's currency expressed in the currency of another country, influencing international trade and investment flows.

Affordability

A measure of an individual's financial ability to meet the cost of living or purchase goods and services.

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation, reflecting the true cost of borrowing or the true yield on an investment.

Desired Investment

The level of investment that businesses plan to undertake, based on their expectations of future profitability.