Assume that rents flow clockwise in a circular economic flow diagram. This implies that land flows:
A. clockwise and profits flow counterclockwise.
B. clockwise and capital flows counterclockwise.
C. counterclockwise and capital flows clockwise.
D. counterclockwise and profits flow clockwise.
Answer: D
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External costs are the difference between
A. Benefits and costs. B. Average and marginal costs. C. Marginal social benefits and marginal social costs. D. Social costs and private costs.
Refer to Figure 27-9. Given that the economy has moved from point A to point B in the graph above, which of the following would be the appropriate fiscal policy to achieve potential GDP?
A) decrease the money supply B) increase government spending C) increase interest rates D) increase taxes
In a franchised network in which all managers are required to pay a percentage of their sales to pay for system-wide advertising, there ________ a free -rider problem and it is ________ likely that the system-wide quantity of advertising will be optimal.
A) is; less B) is not; more C) is not; less D) is; more
If two consumption bundles lie on the same indifference curve, then:
A. the consumer prefers the bundle that is farthest from the origin. B. the consumer does not prefer one bundle over the other. C. the consumer prefers the bundle that is farthest to the right on the indifference curve. D. the consumer prefers the bundle that is farthest to the left on the indifference curve.