In the circular flow diagram, households' payments ________ the government.
A. flow into and out of
B. do not affect
C. only flow into
D. only flow out of
Answer: A
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Two identical firms have access to a spring. Their marginal cost of bottling water from the spring is a constant 10¢ per bottle. The market demand for bottled spring water is P = 250 - 20Q, where P is the price (in cents per bottle) and Q is the quantity demanded (in hundreds of bottles).
(i) Suppose the two firms form a successful cartel. How much bottled water will the firms produce, and what price will they charge? (ii) Suppose the firms behave as in the Bertrand model of oligopoly. How much bottled water will the firms produce, and what price will they charge? (iii) Suppose the firms behave as in the Cournot model of oligopoly. How much bottled water will the firms produce, and what price will they charge?
If Country A's has an overall balance surplus, then the:
a. Central bank must not be intervening in the foreign exchange market. b. Government has to be running a budget deficit. c. Effect is to cause the monetary base to rise. d. Effect is to cause the monetary base to fall. e. Financial account must be in deficit.
The main reason why the economy’s aggregate supply curve slopes upward is that
A. as the price level rises, businesses incur additional costs. B. businesses typically purchase labor and other inputs under long-term contracts that fix the cost of the input in money terms. C. as the price level rises, workers have higher real wages to spend for additional consumer goods. D. All of these responses are correct.
Over half of U.S. currency is
A) held abroad. B) used in the underground economy. C) held by banks as reserves. D) held by businesses, especially retailers, for making transactions.