In the circular flow model of the economy, the resource market is where
a. consumers purchase consumer goods and services
b. firms purchase goods and services
c. consumers supply goods and services
d. firms purchase labor, land, and capital
e. consumers purchase labor and capital
D
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The production possibilities curve illustrates the basic principle that
A. an economy’s capacity to produce increases in proportion to its population. B. if all resources of an economy are in use, more of one good can be produced only if less of another is produced. C. an economy will automatically seek that output at which all of its resources are employed. D. no opportunity cost exists in production.
In the above figure, if the budget line shifts from RT to RS, the income effect is illustrated by the move from
A) a to b. B) a to c. C) b to c. D) T to S.
Scarcity: a. occurs only in centrally planned economies
b. will likely be eliminated by technological progress. c. exists only in poor nations. d. occurs if there are insufficient resources to provide for human wants.
Financial markets are important for bringing equilibrium to the loanable funds market, but do not affect the efficient allocation of scarce resources in the long-run
a. True b. False Indicate whether the statement is true or false