Question Details

In the circular flow model of an economy, households



1) Compared to the other sources of spending, net exports is
A) large and negative.
B) small and negative.
C) large and positive.
D) small and positive.
2) The circular flow diagram shows that
A) the flow of payments to the factors used to produce goods and services exceeds the flow of
payments for final goods and services.
B) goods and factor markets are independent.
C) the total amount of income generated by the economy equals the total purchases of final
goods and services.
D) consumption expenditure equals saving.
3) The circular flow diagram shows
A) how nominal GDP is distinct from real GDP.
B) how the prices of factors are determined.
C) the effects of inflation in a simple economy.
D) the flows between different sectors of the economy.
4) The circular flow diagram indicates that
A) households sell the services of factors of production to firms.
B) firms buy the services of factors of production from the government.
C) households sell goods and services to the government.
D) firms buy goods and services from households.

5) In the circular flow model of an economy, households
A) receive income from buyers of goods and services.
B) receive income from the sale of factors in the goods markets.
C) pay firms for the use of their factors.
D) receive income from producers for the use of factors in the factor markets.



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