The circular flow model illustrates:
A. The importance of having a central plan for the economy
B. How natural and other resources are created
C. How money is created by the banking system
D. The interdependence of businesses and consumers
Answer: D
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Money serves as a basic yardstick for measuring economic value (a unit of account), allowing
A. easy comparison of the relative prices of goods and services. B. goods and services to be exchanged with a double coincidence of wants. C. people to hold their wealth in a liquid form. D. governments to restrict the issuance of private monies.
When oligopolists join together in a cartel, they: a. choose to ignore their mutual interdependence
b. indicate awareness that their behavior is interdependent. c. violate the law of supply and demand. d. attempt to behave like perfect competitors.
Many macroeconomic variables a. fluctuate together and by different amounts
b. fluctuate together by the same amounts. c. never fluctuate together. d. fluctuate together about half of the time and by the same amount.
Oligopoly is more difficult to analyze than other market models because:
A. the number of firms is so large that market behavior cannot be accurately predicted. B. the marginal cost and marginal revenue curves of an oligopolist play no part in the determination of equilibrium price and quantity. C. of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models. D. unlike the firms of other market models, it cannot be assumed that oligopolists are profit maximizers.