Question 1

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

Accepted Answer

In the circular flow model, firms are on the selling side in the goods market as they produce and sell goods and services to households and other entities.

Question 2

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

Accepted Answer

The circular flow model identifies two types of markets, the goods market and the factor market. In the goods market, households purchase goods and services from firms, who produce and supply them. In the factor market, households supply labor and other factors of production to firms, who then pay for those inputs. Therefore, option D, goods and factor markets, is the correct answer.

Question 3

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

Accepted Answer

The circular flow model illustrates that households can make choices about how much they will spend on goods and services. This consumption choice directly impacts the amount of goods and services that firms will produce in order to fulfill that demand.

Question 4

The decisions of firms and households are

Accepted Answer

The circular flow model shows that firms and households interact through markets, with firms supplying goods and services to households in exchange for payment, and households supplying labor and other resources to firms in exchange for income. These interactions are coordinated by the forces of supply and demand in markets for goods, services, and factors of production. While the government may play a role in regulating or influencing these markets, the overall coordination is primarily achieved through market mechanisms.

Question 5

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 has the highest average income per person among the listed countries, due to its strong economy and high levels of productivity.

Question 6

The circular flow model shows the flow of

Accepted Answer

The circular flow model shows the flow of expenditure and income throughout the economy. It demonstrates how households, firms, and the government all interact with each other in the markets for goods and services and factors of production. The model shows how the money flows between these groups, as well as the goods and services exchanged.

Question 7

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 in 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, producing goods and services for sale.

Question 8

The circular flow model shows the

Accepted Answer

The circular flow model is a simplified representation of how goods, services, and money flow through an economy. It shows how households, firms, and governments interact through markets for goods and services and markets for factors of production, resulting in a continuous flow of expenditure and incomes. Choice A, B, D, and E are not accurate descriptions of the circular flow model.

Question 9

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

Accepted Answer

The basic circular flow model illustrates the flow of goods and services, and payments between the two primary decision-making units in an economy: households and firms.

Question 10

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

Accepted Answer

Advanced economies, despite their relatively small number in comparison to developing economies, are highly productive and contribute a significant portion to the world's total production. The 29 advanced economies account for approximately 53% of the total world production, showcasing their efficiency and technological advancement. The 118 developing economies, while numerous, contribute about 39% to the total world production, reflecting their growing but still developing economic capabilities.

Question 11

The emerging market economies are

Accepted Answer

Emerging market economies are those that are transitioning from state-owned production to free markets. The other choices do not accurately describe the definition of emerging market economies.

Question 12

The circular flow model shows that goods and services flow from

Accepted Answer

In the circular flow model, goods and services flow from businesses to households. This is because businesses produce goods and services and then sell them to households, who purchase them for their consumption or personal use.

Question 13

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

Accepted Answer

The factor markets are the markets in which the factors of production (land, labor, capital, and entrepreneurship) are bought and sold.

Question 14

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 better education and training systems, and more physical capital due to higher levels of investment in infrastructure and technology.

Question 15

Dan missed class the day the professor 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 together buyers and sellers. It does not necessarily require a physical location, written contract or specific number of buyers and sellers.

Question 16

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

Advanced economies have higher levels of technological advancement and more resources to invest in capital equipment, which leads to a higher percentage of factories using advanced capital equipment. Developing economies, on the other hand, have limited resources and a less developed technological base, so fewer factories use advanced capital equipment. Therefore, choice E, "virtually all" for advanced economies and "some" for developing economies, is the best fit.

Question 17

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

Accepted Answer

In a market economy, households own the factors of production (land, labor, capital, entrepreneurship) and firms determine how much of those factors to hire based on market demand and their own production needs. The government may have some influence through regulations or taxes, but they do not directly determine the amounts of factors to hire.

Question 18

The circular flow model is used to show the

Accepted Answer

The circular flow model is primarily used to illustrate the flow of expenditures and incomes in an economy, with households and businesses interacting in product and factor markets. It does not focus on natural resources or production materials, nor does it reflect changes in economic activity or the flow of supply and demand.

Question 19

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

Accepted Answer

Consumption goods are the final products that are bought and sold by individuals and households. Therefore, they are a part of the goods market in the circular flow model. Financial, factor, and government markets are concerned with different aspects of the economy and do not directly deal with consumption goods. Monetary flows refer to the movement of money within the economy, but consumption goods are physical products.

Question 20

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

Accepted Answer

In the circular flow model, households own the factors of production, which they sell to firms in exchange for income.

Quiz 2: The U.S.and Global Economies