Consider a small economy with 3 individuals where each individual produces $1000 worth of final goods and services. The national income for this economy is
A)$3000.
B)less than $3000 if there are taxes in this economy.
C)less than $3000 if some of the income is saved.
D)more than $3000 if the individuals are earning profits.
E)more than $3000 if some of the income is invested.

Question

Quizplus · Accepted Answer

The national income for this small economy is simply the sum of the income earned by each individual. Since each individual produces $1000 worth of final goods and services, the total national income is $1000 + $1000 + $1000 = $3000. Taxes, savings, profits, and investments are not relevant to calculating the national income in this scenario.

Consider a Small Economy with 3 Individuals Where Each Individual