1. When prices and wages are fixed, what sequence describes how a change in demand can affect economic activity from year to year?
2. A firm purchases new equipment to expand its productive capacity. Which GDP expenditure component does this purchase represent?
3. In a closed economy with no exports or imports, which expression gives total goods demand?
How do production, income, and demand affect one another year to year?
Demand changes affect production when prices and wages are fixed; production changes income, which changes demand.
What does consumption (C) include?
Goods and services purchased by consumers.
What is total goods demand in a closed economy?
What determines output in the goods-demand model?
Demand determines output.
What condition defines goods-market equilibrium in a closed economy?
.
What formula gives equilibrium output with linear consumption?
.
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