Refer to the above figure. If flow (8) is revenues and flow (4) is economic resources (land, labor, capital, and entrepreneurial ability), then box:
A. A is the resource market and box B is the product market.
B. C is the product market and box B is the resource market.
C. B is the resource market and box A is the product market.
D. D is the product market and box B is the resource market.
Answer: D
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A "war on drugs" is waged, and, as a result, a larger quantity of drugs flowing into the United States is seized and more drug traffickers are arrested. If demand for drugs is inelastic, one would expect the total expenditure on drugs to: a. decrease
b. increase. c. stay constant. d. There is not enough information available to make a determination.
Which of the following is not correct?
a. When developing economic theories, graphs offer a way to visually express ideas that might be less clear if described with equations or words. b. Graphs are one way of expressing the relationships among variables. c. When studying the relationship between two economic variables, graphs allow economists to draw indisputable conclusions about causes and effects. d. When analyzing economic data, graphs provide a powerful way of finding and interpreting patterns.
If the Fed reduces inflation 1 percentage point and this makes output fall 5 percentage points and unemployment rises 2 percentage points for one year, the sacrifice ratio is
a. 1/5. b. 2. c. 5/2. d. 5.
Which of the following directs the buying and selling of U.S. government securities?
A. Board of Governors B. Federal Reserve Banks C. Federal Open Market Committee D. Federal Advisory Council