Consider a Closed Economy Without a Government and Without International

question 67

Multiple Choice

Consider a closed economy without a government and without international trade. What will be true when this economy is in equilibrium?

• A) Total planned real investment spending will exceed total planned real expenditures.
• B) Planned real investment spending will exceed real planned saving.
• C) Planned real consumption spending equals real GDP.
• D) Planned real consumption spending plus planned real investment spending equals real GDP.

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Definitions:

Wages Payable

An account that records the amounts owed to employees for work performed that has not yet been paid.

Factory Overhead

All indirect costs associated with the production process, such as maintenance, utilities, and management salaries, not directly tied to specific units of product.

Factory Overhead

Costs associated with operating a factory that are not directly tied to the production of goods, such as utilities, maintenance, and management salaries.

Work in Process

The cost of unfinished goods in the manufacturing process including labor, raw materials, and overhead.