The demand for output in a closed economy is the sum of:
A) public saving and private saving.
B) the quantity of capital and labor and production technology.
C) consumption, investment, and government spending.
D) government purchases and transfer payments minus tax receipts.

Question

Quizplus · Accepted Answer

The demand for output in a closed economy is determined by the three components of GDP: consumption, investment, and government spending. Public saving and private saving contribute to the economy's ability to produce output in the long run, but they do not directly determine the demand for output in a given period. The quantity of capital and labor and production technology are the factors of production, which determine the economy's potential output, but they do not directly determine the demand for output. Government purchases and transfer payments minus tax receipts determine the government's budget deficit or surplus, but they do not directly determine the demand for output.

The Demand for Output in a Closed Economy Is the Sum