Suppose That in 2016 Canada's Automobile Manufacturers Produced 2 Million

question 38

Multiple Choice

Suppose that in 2016 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each.And in 2017 they produced 1 million cars priced at $40 000 each.Ceteris paribus,the change in nominal national income is

• A)a decrease because fewer cars were produced.
• B)an increase because the price of each car increased.
• C)insufficient information to know.
• D)no change in nominal national income.
• E)an increase because of inflation.

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Definitions:

Circular-Flow Model

A model that illustrates the movement of resources and money between firms and households in an economy.

Capital

Wealth in the form of money or other assets owned or employed in business by an individual, firm, or country.

Wages and Income

Represents the earnings received by laborers for their work and can include salaries, wages, and other forms of compensation.

Circular-Flow Diagram

A visual model that shows how goods, services, and money move through the economy in a continuous, circular flow between households and firms.