Based on the circular flow model, goods and services flow from:
A. households to businesses in product markets.
B. businesses to households in product markets.
C. households to businesses in factor markets.
D. businesses to households in factor markets.
Answer: B
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Nominal GDP is GDP in a given year
A) valued in the prices of that year. B) valued in the prices of the base year. C) adjusted for inflation. D) adjusted for anticipated inflation.
When employers discriminate, they: a. may believe that they have sound economic reasons for doing so. b. may pay the price in lost earnings and productivity
c. may subject themselves to civil action. d. may be characterized by all of the above.
If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would
a. increase by 4%. b. increase by 6.25%. c. decrease by 4%. d. decrease by 6.25%.
When exchange rates are fixed and the foreign nation's interest rate increases, what happens next?
A) The home nation's IS curve shifts out because of a depreciation and an increase in the trade balance. B) The home nation's LM curve shifts right, and its interest rate falls. C) Fixed exchange rates force the home nation to raise its interest rates. D) The home nation and the foreign nation are always in equilibrium, so no changes occur.