Which of the following statements about a circular flow model is false?
A) Producers are buyers in the factor market and sellers in the product market.
B) Households are neither buyers nor sellers in the input market.
C) Households are buyers in the product market.
D) Producers are buyers in the factor market.
B
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An increase in the nominal exchange rate, e, defined as the number of units of the foreign currency that one unit of the domestic currency will buy, indicates that the domestic currency has ________ relative to the foreign currency.
A. depreciated B. become undervalued C. appreciated D. become overvalued
Suppose that a country imports $5.7 billion of goods and services and exports $4.2 billion of goods and services. What is the value of net exports?
A. -$1.5 billion B. $9.9 billion C. -$9.9 billion D. $1.5 billion
If a firm wants to borrow $10 million and the real interest rate increases from 5 percent to 6 percent, then the cost of the investment has increased by
A) $6 million per year. B) $100,000 per year. C) $1 million per year. D) $600,000 per year. E) nothing because the real interest rate is the return the firm will earn on its investment.
Which of the following best describes the income velocity of money?
A) V = PMs B) V = Y C) V = PY/Ms D) V = Ms/PY