One of the principles behind the concept of the circular flow is that
A) in every economic exchange, the seller receives exactly the same amount that the buyer spends.
B) in every economic exchange, the seller receives less than the amount that the buyer spends.
C) in exchange involving products, the seller receives less than the amount the buyer spends, but in resource markets the seller receives more than the buyer spends.
D) the seller of goods receives exactly the same amount that the buyer spends, but the seller of resources receives less than the buyer spends.
A
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If that the marginal propensity to save (MPS) increased from 0.20 to 0.25, this would cause the multiplier effect to
A) increase. B) decrease. C) stay the same. D) None of the above is correct.
Suppose that the government passes a law requiring households to increase savings 10% above previous levels. According to Solow's growth theory, in the long run
A) output per capita grows more rapidly. B) output per capita grows at the constant steady state rate, n. C) output per capita stays constant. D) None of the above.
Business investment is most similar to what form of consumer expenditures and why?
A) consumer nondurables since they are "used up" in producing consumer welfare B) consumer durables since they accelerate consume welfare C) consumer durables since they may be treated as a form of household saving D) Both A and B are correct.
Two factories make wooden chairs. If the workers in factory A make each chair from start to finish and the workers in factory B divide labor, one would assume
A) the chairs in factory A are of higher quality. B) the workers in factory B have more job satisfaction. C) factory B can take advantage of division of labor and produce more efficiently. D) factory A can take advantage of division of labor and produce more efficiently.