Econ 100 : Explain why an economy's income must equal its expenditure. - 68181

Solution Posted by
Solution Detail
Price: $8.00
  • From: ,
  • Posted on: Tue 01 Jul, 2014
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description

1. Explain why an economy's income must equal its expenditure. 

2. Sometimes at the beginning of an economic boom, total employment increases sharply but the unemployment rate does not fall. Why might this occur? 

3. When the economy is at full employment, is the unemployment rate at 0 percent? Why or why not?

4. How would a more generous unemployment insurance system affect the full employment figure

Solution Description

why an economy's income must equal its expenditure.

The reason that an economy’s income must be same as its expenditure is simply that every transaction has two parties: a buyer and a seller. Every dollar of spending by some buyer is a dollar of income for some seller. Thus, the transaction contributes equally to the economy’s income and to its expenditure. Hence no disparity can exist between the two.

Sometimes at the beginning of an economic boom, total employment increases sharply but the unemployment rate does not fall. Why might this oc

Attachments
S_007.doc
S_007.doc