Refer to the Information Provided in Table 9

question 52

Multiple Choice

Refer to the information provided in Table 9.4 below to answer the questions that follow.
Table 9.4
All Figures in Billions of Dollars

-Refer to Table 9.4.If taxes are reduced from $100 billion to $50 billion and government spending is reduced from $200 billion to $150 billion,the new equilibrium level of income

• A)is $3,550 billion.
• B)is $3,350 billion.
• C)is $1,600 billion.
• D)cannot be determined from this information.

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Definitions:

Rent-a-Wreck Industry

The business sector that specializes in renting out older, often pre-owned vehicles at reduced rates compared to standard rental services.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, which leads to firms being price takers.

Perfectly Competitive Firm

A business that operates in a market where there are many buyers and sellers, all selling identical products, with no single entity being able to influence the market price.