Which of the following best characterizes the circular flow of income?
A. Businesses buy resources from the government, and households buy goods and services from businesses.
B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.
C. The government purchases resources from businesses and households and then sells goods and services to businesses and households.
D. Households buy factors of production from businesses, and businesses buy goods and services from households.
B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.
You might also like to view...
A free rider problem is created by private goods
Indicate whether the statement is true or false
Which of the following is true of marginal product?
a. The firm should produce where marginal product is greatest. b. The firm should produce where marginal product is increasing. c. When marginal product is falling, total product is falling. d. The firm should produce where marginal product is zero. e. When marginal product is increasing, total product is increasing by increasing amounts.
The discount rate is
a. set in the money market. b. set by each member bank. c. set by the Federal Reserve Bank. d. the same as the federal funds rate.
The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.
a. natural rate of unemployment b. business cycle c. supply curve d. labor supply