A circular-flow diagram is a model that
a. helps to explain how participants in the economy interact with one another.
b. helps to explain how the economy is organized.
c. incorporates all aspects of the real economy.
d. Both (a) and (b) are correct.
Answer: d. Both (a) and (b) are correct.
You might also like to view...
One characteristic of a financial crisis caused by macroeconomic imbalances is that it
A) may or may not be predictable. B) will occur eventually even though its timing is unpredictable. C) may be caused by expansionary fiscal policies accompanied by high budget deficits. D) may be caused by high deficits financed by increases in the money supply. E) All of the above.
According to rent-seeking theory, which group is most likely to benefit from representative democracy?
a. consumers b. taxpayers c. the poor d. children e. lawyers
Recent research regarding increases in the Federal minimum wage shows that
A. unemployment is only slightly affected. B. the minimum wage has many benefits. C. it improves labor productivity. D. the unemployment rate rises.
The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because
A. interest rates may turn out to be higher in the future. B. unemployment rates may turn out to be higher than they are currently predicted to be. C. GDP grown may turn out to be higher than it is currently predicted to be. D. taxable incomes may turn out to be lower than they are currently predicted to be.