Author Question: Which of the following would increase aggregate demand? a. A deficit in the government budget b. An ... (Read 50 times)

colton · **on:** Jun 30, 2018

Which of the following would increase aggregate demand?
a. A deficit in the government budget
b. An increase in taxes
c. An increase in government borrowing
d. A surplus in the government budget
e. A decrease in government spending

Question 2

What is the difference between economic and accounting profit? Why is a distinction between them important?

coyin · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

a

Answer to Question 2

An economic profit includes implicit costs and accounting profit does not. A distinction between them is important because an accounting profit is a relative amount of money. Some amount of accounting profit may or may not be a sufficient amount of profit to keep an entrepreneur in his/her present line of business. Whereas an economic profit, if it is earned, is always good news because it is an amount of profit above the entrepreneur's opportunity cost.