📌 Economic investment adds to global potential output, whereas financial investment refers to investment from a financial perspective and is not included in the economic definition.
📌 A trade surplus occurs when exports exceed imports, whereas a trade deficit occurs when imports exceed exports.
1. In a closed economy with linear consumption, which formula gives equilibrium output?
2. A household has disposable income of and consumes . How is its private saving defined?
3. Why can a collective effort to save more lower total saving in the paradox of thrift?
With fixed prices and wages, what happens to production when demand changes?
Production changes.
With fixed prices and wages, what changes when production changes?
Income changes.
What does economic investment add to?
Global potential output.
How are net exports, or the trade balance, calculated?
Exports minus imports.
When does a trade surplus occur?
When exports exceed imports.
What identity defines total goods demand in an open economy?
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