In the circular flow diagram, the different payments made by firms to households include
A. wages and profits.
B. taxes and transfer payments.
C. transfer payments and dividends.
D. interest and taxes.
Answer: A
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Real business cycle theorists agree with new classical economists that
a. agents maximize utility and form expectations rationally. b. the labor market do not clear. c. imperfect information plays a big role in business cycles. d. Both a and c
Assume the United States can use a given amount of its resources to produce either 20 airplanes or 8 automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. The U.S. should specialize in:
A. airplanes. B. automobiles. C. both goods. D. neither good.
If it costs a firm $10 to produce a good and the same good sells for $7 abroad, then this firm is engaging in
A) profit maximization. B) price discrimination. C) price differentiation. D) dumping.
If a U.S. firm buys tulips from a Dutch firm and the Dutch firm uses the dollars it gets to buy U.S. stocks, the U.S. trade balance ________ and the U.S. financial account ________.
A. rises; rises B. falls; falls C. rises; falls D. falls; rises