The circular flow diagram shows the flow of resources between households and firms
a. True
b. False
Indicate whether the statement is true or false
True
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In practice, it is usual to assume that, in explaining the impact of a change in interest rates ________
A) the substitution effects outweigh the income effects B) the income effect outweighs the substitution effect C) the income and substitution effects cancel out with one another D) the income effect increases the severity of the substitution effect
In the long run, assuming that the owner of a firm in a competitive industry has positive opportunity costs, she
a. should exit the industry unless her economic profits are positive. b. will earn zero accounting profits but positive economic profits. c. will earn zero economic profits but positive accounting profits. d. should ignore opportunity costs because they are a type of sunk cost that disappears in the long run.
The major way that the government supports crop prices is by granting nonrecourse loans to farmers
Indicate whether the statement is true or false
Because of international time lags between ordering and the receipt of goods, a depreciation of a currency:
a. will not change import or export volumes for a time, since prices on orders already placed cannot be renegotiated. b. will immediately change import and export volumes, because buyers and sellers always include an opt-out clause. c. will affect import and export volumes in third countries not party to the particular transaction. d. will never change import or export volumes.