In the circular flow model of the market system, business firms:
A. Buy products and resources
B. Sell products and resources
C. Buy products and sell resources
D. Sell products and buy resources
Answer: D
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Sharon buys some common stock in 1990 for $10,000 and sells it in 2000 for $15,000. During the same period, prices have risen by 75 percent. The net result of Sharon’s stock purchases is that she will
A. pay no taxes because she earned negative real capital gains. B. lose purchasing power and have to pay taxes anyway. C. earn a real capital gain of $5,000 plus 75 percent. D. earn a real capital gain of $15,000 minus 75 percent.
Sellers bear the entire incidence of a tax on a good. This outcome can occur if
A) supply is perfectly inelastic. B) the good is an inferior good. C) demand is perfectly inelastic. D) the demand curve is downward sloping and the supply curve is upward sloping. E) supply is perfectly elastic.
Someone who says he loves his mother far more than he loves football but nonetheless attends a football game when he could be visiting his mother
A) displays weakness of will. B) is a hypocrite. C) is behaving inconsistently with his own stated values. D) places a lower marginal value on visiting his mother than on attending the football game. E) shows that the marginal value of visiting his mother is less for him than the marginal cost of attending the football game.
When the required reserve ratio is decreased:
a. the excess reserves of member banks are reduced, but the money multiplier is not affected. b. the excess reserves of member banks are reduced, and the money multiplier is increased. c. the excess reserves of member banks are increased, but the money multiplier is not affected. d. the excess reserves of member banks are increased, and the money multiplier is increased.