For an Economy as a Whole,income Must Equal Expenditure Because

question 22

Multiple Choice

For an economy as a whole,income must equal expenditure because

• A)the number of firms is equal to the number of households in an economy.
• B)individuals can only spend what they earn each period.
• C)every dollar of spending by some buyer is a dollar of income for some seller.
• D)every dollar of saving by some consumer is a dollar of spending by some other consumer.

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Definitions:

BAT Model

A behavioral approach to financial modeling that incorporates psychological factors into market predictions.

Miller-Orr Model

A financial model used to manage cash balances and optimize the level of cash holdings by setting upper and lower limits within which the balance can fluctuate before triggering a transfer of funds.

Cash Balance

The amount of cash a company has on hand, which includes currency, coins, and balances in checking and savings accounts.

Low Cash Balance

A situation where an individual or organization has a minimal amount of cash on hand, potentially affecting their ability to cover short-term liabilities.