Answer the following statements true (T) or false (F)
1. In a market system, entrepreneurs start up businesses in order to earn a high salary.
2. In a market system, the income earned by owners of natural resources is called interest income.
3. A corporation is a type of business firm where the debt of the firm is considered its owners' personal responsibility.
4. According to the circular flow model of the market system, firms get their ability to pay for their costs of production from the revenues that they receive for their products.
1. FALSE
2. FALSE
3. FALSE
4. TRUE
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In an open economy with a given level of real interest rates and risk, an increase in real interest rates abroad will ________ capital inflows and ________ the equilibrium domestic real interest rate.
A. increase; decrease B. increase; increase C. decrease; increase D. decrease; decrease
Money is the standard of exchange by which any type of goods can be purchased
Indicate whether the statement is true or false
The law of supply states that other things being equal
A) supply creates its own demand. B) supply will increase if productivity increases. C) as price increases, quantity supplied increases. D) supply will increase to meet demand if demand increases.
A signaling theory of education suggests that educational attainment
a. is a signal of high marginal productivity. b. is correlated with natural ability. c. increases the productivity of low-ability workers. d. Both a and b are correct.