What is the relationship shown by the circular flow among income, total expenditure, and GDP?
What will be an ideal response?
They are all equal. The value of production, which is GDP, equals income because firms pay factors (income) the revenue they receive from selling the goods and services they produce (GDP). Next, the revenue that firms receive from selling the goods and services they produce (GDP) is equal to what is spent as expenditures on the goods and services. (total expenditure).
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Based on the figure above, in which quarter or quarters did a peak occur?
A) between 2012, 2nd quarter to 2013, 2nd quarter and also between 2014, 2nd quarter to the end of the figure B) in 2013, 2nd quarter C) in 2014, 2nd quarter D) between 2013, 2nd quarter to 2014, 2nd quarter E) There are no peaks illustrated in the figure.
As a rule, as a consumer acquires more and more of a good, the marginal utility declines.
Answer the following statement true (T) or false (F)
In professional golf, a tournament winner might win, say, $1 million, whereas second place wins only $600,000. Why might golf have a 40% reduction in prize money from first and second place?
A) To ensure that there is enough money to pay those who finish near last. B) To motivate golfers to take risks they might not otherwise take. C) To motivate golfers to not take risks they might otherwise take. D) The Professional Golfers Association is a cartel.
When compared to a public housing of the same value, a rent subsidy _____
a. would always make the individual better off b. would always make the individual worse off c. would make some individuals better off and some individuals worse off depending upon their preferences d. has a lower potential for fraud