Question 1

In the circular flow model,consumption goods are bought and sold in the

Accepted Answer

Consumption goods are products or services that are purchased by households for their own use. These goods are bought and sold in the goods markets, which include both physical markets (such as grocery stores and shopping malls) and digital markets (such as online shopping platforms).

Question 2

In the circular flow model,which of the following is on the selling side in the goods market?

Accepted Answer

The answer of In the circular flow model,which of the...

Question 3

Compared to the developing economies,the advanced economies have ________ human capital and ________ physical capital.

Accepted Answer

Advanced economies typically have more human capital due to higher education levels and more physical capital due to greater investment in infrastructure and technology.

Question 4

As the circular flow model points out,a choice that households make is how

Accepted Answer

The circular flow model shows that households have the ability to purchase goods and services, which drives the demand for production from firms. Thus, the choice that households make in terms of how many goods and services they purchase affects the level of production in the economy.

Question 5

In the circular flow model,which of the following is on the buying side in the goods market?
i.Firms
ii.Households
iii.Federal,state and local governments

Accepted Answer

In the circular flow model, households and governments are on the buying side of the goods market. Households purchase goods and services for personal use, while governments buy goods and services for public use and infrastructure. Firms, on the other hand, are typically on the selling side in the goods market, producing goods and services for sale.

Question 6

The decisions of firms and households are

Accepted Answer

The circular flow model shows that households and firms interact through markets, which coordinate their decisions. The model suggests that firms make decisions based on the demand for their products in the market, while households make decisions based on their income and the prices of goods in the market. Therefore, the decisions of firms and households are coordinated by markets.

Question 7

________ the owners of the factors of production,while ________ what amounts of those factors to hire.

Accepted Answer

In a market economy, households are the owners of the factors of production (land, labor, capital, and entrepreneurship) and they decide how much of their factor to supply. Firms determine the amounts of those factors to hire based on their needs and the prices at which they are available in the market. The government does not determine the ownership or allocation of factors of production in a market economy.

Question 8

The circular flow model shows the

Accepted Answer

The circular flow model is a simple representation of the economy that shows the flow of expenditure and incomes that arise from the decisions made by households, firms, and government. It shows that households provide firms with labor and other inputs in exchange for wages and salaries, while firms produce goods and services that households buy. In turn, households buy these goods and services using their income, which includes wages and salaries, profits, and rent. The model also shows that the government plays a role in the economy by providing goods and services and collecting taxes, which it then spends on various programs and services. Overall, the circular flow model illustrates how different actors in the economy interact and exchange goods, services, and money in a continuous circular flow.

Question 9

In the circular flow model,the factor markets are the markets in which

Accepted Answer

Factor markets are the markets where the factors of production, such as land, labor, capital, and entrepreneurship, are bought and sold by households and firms. Therefore, option B is the correct choice. Option A refers to tax markets, which are not a part of the circular flow model. Options C, D, and E refer to product markets, which are not the same as factor markets.

Question 10

In the circular flow model,there are two types of markets: the ________ market and the ________ market.

Accepted Answer

The two types of markets in the circular flow model are the goods market and the factor market. The goods market is where households purchase goods and services from firms, while the factor market is where firms purchase factors of production such as labor and capital from households. Therefore, option B is the correct answer.

Question 11

In the advanced economies,________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment.

Accepted Answer

In advanced economies, most factories are equipped with advanced capital equipment due to higher levels of technology and investment. In developing economies, some factories may have advanced equipment, but it is not as widespread due to limited resources and investment.

Question 12

What two groups of decision makers are represented in the basic circular flow model?

Accepted Answer

The basic circular flow model represents two groups of decision makers: households and firms. Households supply factors of production such as labor, land, and capital to firms, and in return, receive goods and services from those firms. Firms use those factors of production to produce goods and services, which they sell to households. This creates a circular flow of income and expenditure between households and firms.

Question 13

In the circular flow model,which of the following owns the factors of production?

Accepted Answer

Households own the factors of production in the circular flow model, providing labor, land, and capital to firms in exchange for income.

Question 14

The emerging market economies are

Accepted Answer

Emerging market economies are in transition from state-owned production to free markets.

Question 15

The circular flow model shows the flow of

Accepted Answer

The circular flow model illustrates how money, goods, and services flow between households and firms, showing the interaction between expenditure and income in the economy.

Question 16

As a percentage of total world production,production in the 29 advanced economies is about ________ per cent of total world production and in the 118 developing economies is about ________ per cent of total world production.

Accepted Answer

Advanced economies contribute approximately 53% to total world production, while developing economies contribute about 39%.

Question 17

Dan missed class the day his lecturer covered the circular flow model.Dan asked his friend Joan to explain markets to him.Joan correctly stated that a market

Accepted Answer

A market is any arrangement that brings buyers and sellers together, whether it is a physical location or an electronic platform. It does not have to be limited to a specific number of buyers or sellers, nor does it require a written contract. Additionally, markets can involve the exchange of goods or services beyond just groceries.

Question 18

Among the United States,Canada,Russia,India and the United Kingdom,the country with the highest average income per person is

Accepted Answer

The United States consistently ranks as having the highest average income per person compared to the other listed countries. The gap between the United States and the United Kingdom and Canada is not significant, but the difference is more substantial when compared to Russia and India.

Question 19

The circular flow model is used to show the

Accepted Answer

The circular flow model is used to illustrate the flow of money and goods and services in the economy, showing how expenditures and incomes reciprocally affect each other. Option A is incorrect because the circular flow model does not reflect economic expansions and contractions, but rather serves as a representation of ongoing economic activity. Option C is incorrect because it places too much emphasis on supply and demand, and not enough on the interplay between expenditures and incomes. Options D and E are irrelevant to the circular flow model.

Question 20

The circular flow model shows that goods and services flow from

Accepted Answer

The circular flow model shows that businesses produce goods and services to sell to households and other businesses in the goods market, while households provide factors of production (such as labor, capital, and land) to businesses in the factor market. As a result, the goods and services flow from businesses to households in exchange for payment, which represents the money flow in the circular flow model. Therefore, choice D - businesses to households - is the correct answer.

Quiz 2: The Australian and Global Economies