Which term refers to the total quantity and quality of goods and services that people living in an economic system can purchase? A. Demand and supply schedule B. Business cycle supply C. aggregate output D. Consumer price index E. Standard of living
The correct answer and explanation is:
Correct Answer: C. aggregate output
Explanation:
The term aggregate output refers to the total quantity and quality of goods and services produced in an economy over a specific period. It is a crucial concept in economics used to evaluate the overall economic performance of a country. Aggregate output helps measure a nation’s productivity, and it is often represented by the Gross Domestic Product (GDP), which accounts for all finished goods and services made within a country’s borders.
Aggregate output includes every product or service regardless of industry and reflects the total economic activity. Economists and policymakers use this term to assess whether an economy is growing or shrinking. When aggregate output increases, it typically means that the economy is expanding, businesses are producing more, employment is rising, and incomes are likely improving. On the other hand, a decline in aggregate output may indicate a recession or slowdown.
The choices listed can be clarified as follows:
- Demand and supply schedule refers to a table that shows the quantity of a good that consumers are willing to buy and that producers are willing to sell at different prices.
- Business cycle supply is not a standard economic term.
- Consumer price index (CPI) measures the average change over time in the prices paid by consumers for goods and services, used to monitor inflation.
- Standard of living reflects the overall wealth, comfort, and access to goods and services a population enjoys, but it is an effect rather than a measure of total production.
Therefore, the correct term for the total amount of goods and services people can purchase in an economic system is aggregate output, which reflects the economy’s overall productive capacity.