The simple circular flow of income shows that the total income in an economy equals
A. total profits earned by firms.
B. total expenditures.
C. the total amount of money supplied by the government.
D. all taxes paid by households.
Answer: B
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A change in consumption spending caused by income changes is ________ change in spending, and a change in government spending that occurs to improve roads and bridges is ________ change in spending
A) an autonomous; an induced B) an induced; an autonomous C) a contractionary; an expansionary D) an expansionary; a contractionary
As a percentage of GDP, federal expenditures ________ from 1950 to the early 1990s, ________ from 1992 to 2001, and have ________ since 2001
A) rose; rose; fallen B) fell; rose; fallen C) rose; fell; risen D) fell; fell; risen
A reserve requirement of 10% implies a money multiplier of 10 and a reserve requirement of 15% implies a money multiplier of 15
a. True b. False Indicate whether the statement is true or false
When a market is in equilibrium,
a. quantity demanded equals quantity supplied b. quantity demanded exceeds quantity supplied c. the demand curve is identical to the supply curve d. the economy must be at a point along the production possibilities frontier e. the law of demand is equivalent to the law of supply