Suppose That the Economy Is in Equilibrium with the Government

question 48

Multiple Choice

Suppose that the economy is in equilibrium with the government budget in deficit and with exports greater than imports.According to the circular flow model,

• A)saving must exceed investment
• B)saving must equal investment
• C)saving must be less than investment
• D)saving could be equal to or less than investment
• E)it is impossible to determine anything about saving and investment using the given information

---

Definitions:

Damaged Goods

Items that are broken, defective, or impaired in some way, which typically reduce their value or usefulness.

Period-End Inventory

The total value of all inventory still available for sale by a company at the end of an accounting period.

Gross Profit

Gross profit is the difference between the sales revenue and the cost of goods sold, illustrating how much a company earns from selling its products before other expenses are deducted.

Cost Of Goods Available

The total cost of merchandise a company has for sale, which includes the beginning inventory plus the cost of goods purchased minus ending inventory.