In the circular flow model, the expenditures on goods and services flow in the
A) same direction as goods and services in all cases.
B) same direction as goods and services only if they both flow through the goods market.
C) same direction as goods and services only if they both flow through the factor market.
D) opposite direction as goods and services.
E) same direction as factor markets.
D
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In an open economy, an increase in the government's budget deficit will ________ the domestic real interest rate and ________ the level of capital investment in the country, holding other factors constant.
A. decrease; decrease B. decrease; increase C. increase; increase D. increase; decrease
An income tax cut ________ aggregate demand and ________ aggregate supply
A) increases; decreases B) increases; increases C) decreases; decreases D) decreases; increases E) does not change; increases
True, false, or uncertain? Any firm that is not covering fixed costs should shut down in the short run
Indicate whether the statement is true or false
According to classical economists
A. Demand stimulus is needed to produce full employment. B. Unemployment will not be a serious problem in a market economy. C. Say's law is not valid. D. Wage levels are always "sticky."