Test Your Understanding of Economic Analysis Assumptions
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Questions and Answers

According to the assumptions in the text, which equation represents the nation's output (NNP)?

  • NNP = C + I + G (correct)
  • EL + EC + ET
  • C + I + G
  • M x V = P x Q

    • Based on the assumptions in the text, which equation represents the unit costs of labor?

  • EL + EC + ET
  • Unit costs of labor would be assumed to remain constant for the economy as a whole. (correct)
  • M x V = P x Q
  • C + I + G

    • According to the assumptions in the text, which equation represents the expanded purchasing power tied to increased capital incomes?

  • C + I + G
  • M x V = P x Q
  • Increased purchasing power would be directly tied to increased capital incomes. (correct)
  • EL + EC + ET

    • According to the text, what would be the basis for all growth in net national product (NNP)?

    <p>Both increased consumer spending and increased investment</p> Signup and view all the answers

    According to the text, what would be the limits of consumer spending (C) under the binary growth economic model?

    <p>Projected EL plus EC minus formation costs of each new increment of capital</p> Signup and view all the answers

    According to the text, what would be the result of expanding to full production?

    <p>Both accelerating the rate of new capital formation and operating new and existing enterprises at their fullest potential</p> Signup and view all the answers

    According to the text, what would be a workable means for monetizing expanded investment rates?

    <p>National banking system</p> Signup and view all the answers

    According to the text, what happens to unit labor costs under the binary growth model?

    <p>They decrease</p> Signup and view all the answers

    What does the Capital Homestead Act aim to make available to the masses?

    <p>Access to ownership financing</p> Signup and view all the answers

    According to the text, how would increased consumer spending and increased investment affect the volume of income transactions in the overall economy?

    <p>Increase the volume of income transactions</p> Signup and view all the answers

    What does the formula M x V = P x Q represent according to the text?

    <p>The relationship between money supply and inflation</p> Signup and view all the answers

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