Question

Suppose that an economy consists of only two individuals. Trevor has $1070 available to spend on goods. He decides to purchase $450 worth of produce from Charlotte in the current year. No other economic activity takes place during the current year. Using this information, answer the questions. For the current year, what is the economy's income

Answer 1

The question option are:

1. For the current quarter what is the economy's income?

2. For the current quarter, what is the economy's expenditure?

3. In an economy, how are income and expenditure related?

1. The economy's income for the current year is $450 because there is only one transaction that take place in the year worth of $450

2. The economy's expenditure of the current year is $450 because each transaction has two side. One is the Income, the other is Expenditure. The income is converted to expenditure.

3. In an economy, income and expenditure are related and they are equal. Each transaction has two side. One is the Income, the other is Expenditure. The income is converted to expenditure.