In the circular flow model, profits are considered to be
A. a form of interest payment.
B. a cost of doing business.
C. equal to zero, or else the circular flow would be out of balance.
D. a subtraction from the Gross Domestic Product (GDP).
Answer: B
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Which of the following groups is associated with the policy recommendation that the money stock should grow only at the rate of growth in real GDP?
A. Monetarists B. Keynesians C. Classical quantity theorists D. Economic behaviorists
Suppose the actual rate of unemployment is 4 percent. What is the natural rate of unemployment if actual output equals potential output?
A. ?4 percent B. 4 percent C. 0 percent D. 2 percent
As the economy expands, tax revenues _____ and transfer payments _____.
A. fall; rise B. fall; fall C. rise; fall D. rise; rise
A currency board
A. monitors conditions imposed by the International Monetary Fund (IMF) when it makes a loan to a country. B. establishes a fixed exchange rate by holding only foreign-currency assets and exchanging foreign currency for domestic currency. C. was a key mechanism in the process of European Monetary Union D. establishes the equivalent of a strong fixed exchange rate by mandating the domestic use of a foreign currency.