In the circular flow diagram model:
A. households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses.
B. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households.
C. households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses.
D. Both (a) and (b) are correct.
D. Both (a) and (b) are correct.
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In the Keynesian model of an open economy, a temporary decrease in government purchases would ________ the domestic real interest rate and ________ net desired saving (desired saving less desired investment) in the economy
A) lower; increase B) lower; decrease C) raise; increase D) raise; decrease
Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?
a. The supply curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. b. The supply curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity. c. The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity. d. The demand curve for saddle shoes will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
A subprime mortgage loan is a loan granted to persons who
A) have unusually good credit ratings and who represent a very low risk of default on the debt repayment. B) are borrowing funds to purchase a business, rather than a home. C) might have low credit ratings or some other factors that lead lenders to believe that they could default on the debt repayment. D) work for the government, rather than those who work in the private sector.
A shift from S1 to S2 causes equilibrium price to __________ and quantity to __________.
A. rise; rise
B. fall; fall
C. rise; fall
D. fall; rise