Scenario 26-2

question 74

Multiple Choice

Scenario 26-2.Assume the following information for an imaginary,closed economy.
GDP = $5 trillion;consumption = $3.1 trillion;
government purchases = $0.7 trillion;and taxes = $0.9 trillion.
-Refer to Scenario 26-2.For this economy,public saving is equal to

• A)$0.2 trillion and the government is running a budget surplus of $0.2 trillion.
• B)$0.2 trillion and the government is running a budget deficit of $0.2 trillion.
• C)-$0.2 trillion and the government is running a budget deficit of $0.2 trillion.
• D)-$0.2 trillion and the government is running a budget surplus of $0.2 trillion.

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Definitions:

Marginal Cost

The additional cost incurred in the production of one more unit of a good or service.

Marginal Product

The additional output that is produced by employing one more unit of a particular input, while holding other inputs constant.

Fixed Cost

A financial outlay that is unaffected by variations in the production or sales levels of goods and services.

Marginal Cost

The expense associated with creating an extra unit of a product or service.