Scenario 26-1

question 22

Multiple Choice

Scenario 26-1.Assume the following information for an imaginary,closed economy.
GDP = $100,000;taxes = $22,000;government purchases = $25,000;national
saving = $15,000.
-Refer to Scenario 26-1.For this economy,private saving amounts to

• A)$22,000.
• B)$18,000.
• C)$15,000.
• D)$37,000.

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production supplies.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered, and thus should not affect future business decisions.

Side-Effect Costs

Unintended expenses or losses that occur as a result of business decisions, not directly related to the project in question.