Economics II Chapter 2 Quiz

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What is the relationship between changes in demand and changes in production?

Changes in demand lead to changes in production

Which component is NOT part of the calculation for Aggregate Demand (AD)?

Savings (S)

What is the formula for Net Exports or Trade Balance?

X - IM

During a Trade Surplus, which of the following is true?

Exports are greater than Imports

What does Inventory Investment represent?

Difference between production and sales

Which equation represents the aggregate demand (AD) in a closed economy with no imports or exports?

AD = C + I + G

What does the marginal propensity to consume (C1) represent?

The part of income consumed from the last unit of income

Which equation represents private savings (S)?

S = Y - T - C

What do endogenous variables represent in the context of the model discussed?

Variables that depend on other variables in the model

What role do governments play in relation to exogenous variables in the model?

Governments choose exogenous variables like G and T

Test your knowledge on the changes in macro-indicators, interactions among production, income, and demand, and the cycle of changes in demand, production, and income. Explore the positive and negative impacts on the economy with real-life examples.

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