Macroeconomics 2 Production Function, Demand Function, National Income Division and Market Equilibrium

Macroeconomics 2 Production Function, Demand Function, National Income Division and Market Equilibrium

• How much do the firms in the economy produce? What determines a nation’s total income?
• Who gets the income from production? How much goes to compensate workers, and how much goes to compensate owners of capital?
• Who buys the output of the economy?
• How much do households purchase for consumption, how much do households and firms purchase for investment, and how much does the government buy for public purposes?
• What equilibrates the demand for and supply of goods and services?
• What ensures that desired spending on consumption, investment, and government purchases equals the level of production?