The ________ demonstrates the roles played by households and firms in the market system
A) production possibilities frontier
B) circular flow model
C) theory of comparative advantage
D) business cycle
Answer: B
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The diamond-water paradox of value can be explained by
A) distinguishing between total utility and marginal utility. B) water's high level of utility relative to diamonds. C) water's low price relative to diamonds. D) the fact that utility cannot be measured.
Suppose that the interest rate is so low that banks currently refuse to make loans. An increase in the supply of high-powered money will
A) have no effect on the money supply if all the new high-powered money ends up as bank reserves. B) have no effect on the money supply if all the new high-powered money ends up as cash in the hands of the nonbank public. C) raise the money supply depending on banks reserve-holding ratio. D) All of the above are correct.
In the above figure, a change in autonomous consumption to 100 would cause the consumption function to
A) become steeper. B) become flatter. C) shift down. D) shift up.
Which policy is more effective when handling externalities: Cap-and-trade or emissions fee?
What will be an ideal response?