If We Observe an Economy in Which Desired Saving Has

question 25

Multiple Choice

If we observe an economy in which desired saving has changed,but there has been no change in actual investment,we may infer that ________.

• A)this is a closed economy
• B)this is a large economy
• C)the trade balance has changed in the same direction as the change in desired saving
• D)all of the above
• E)none of the above

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Definitions:

Central Planning

An economic system where the government makes all decisions about the production and distribution of goods and services, controlling resources and directing activities.

Prices

The amount of money required to purchase a good or service, often determined by supply and demand dynamics.

Consumer Sovereignty

The determination by consumers of the types and quantities of goods and services that will be produced with the scarce resources of the economy; consumers’ direction of production through their dollar votes.

Legislation

Laws or legal statutes passed by a legislative body, governing body, or the process of enacting laws.