Problem
1. You learned earlier that expenditures and income should always be equal. In this chapter, you learned that AE and aggregate output (income) can be different. Is there an inconsistency here? Explain.
2. The Economics in Practice describes some of the difficulties that households have with regard to decisions involving trade-offs between the present and the future. Explain briefly how the problem of global warming and the problem of adequate household saving are similar. Describe ways in which the concept of opportunity costs can be used to frame these two problems. What barriers might prevent households or societies from achieving satisfactory outcomes?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.