Question 1

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

Accepted Answer

Factor markets are the markets where factors of production such as land, labor, capital, and entrepreneurship are bought and sold. This includes markets for labor (where workers sell their services), capital (where firms borrow and invest in capital equipment), land (where landowners rent out their property), and entrepreneurship (where entrepreneurs can access funding).

Question 2

The circular flow model shows that goods and services flow from

Accepted Answer

The circular flow model shows that goods and services flow from businesses to households. This is represented by the arrows going from businesses to households in the model.

Question 3

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 provide factors of production (such as labor) to firms in exchange for income, and firms use those factors to produce goods and services that are sold back to households. This model shows how money, goods, and services flow between these two groups in the economy.

Question 4

The circular flow model is used to show the

Accepted Answer

The circular flow model illustrates the flow of expenditures and incomes in the economy, showing how households and businesses interact through goods and services markets and factor markets. It demonstrates how goods and services are exchanged for income, which is then used to purchase more goods and services, creating a continuous circular flow.

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 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 6

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 7

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 (or product) market and the factor market. The goods market is where final goods and services are bought and sold by households, while the factor market is where firms buy the factors of production (such as labor, capital, and raw materials) from households. Therefore, choice D (goods; factor) is the correct answer.

Question 8

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 GDP per capita among the given countries. According to the World Bank, the GDP per capita of the United States in 2020 was $63,416. Canada comes in second at $50,163, followed by the United Kingdom at $42,330, Russia at $11,211, and India at $1,947.

Question 9

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 buyers and sellers together, which can be physical or virtual. It does not necessarily require a written contract, nor does it need to have only one seller and many buyers.

Question 10

________ 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 such as labor, capital, and land. Firms determine how much of these factors to hire based on their production needs and profitability. Therefore, choice A is the correct answer.

Question 11

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.

Question 12

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

According to the information given in the question, production in the 29 advanced economies is about 53% of total world production and in the 118 developing economies is about 39% of total world production. Option A (53;39) is the only choice that matches these percentages, therefore it is the correct answer.

Question 13

The decisions of firms and households are

Accepted Answer

The circular flow model shows how households and firms interact through the market system to coordinate their decisions. Prices that are determined by the market signal to both households and firms what actions they should take, such as how much to produce or consume. Therefore, the decisions of firms and households are coordinated by the market.

Question 14

The circular flow model shows the flow of

Accepted Answer

The circular flow model depicts the continuous flow of goods and services, factors of production (such as labor and capital), expenditure, and income between households and firms in an economy. It shows how income earned by households from firms is spent on goods and services produced by firms, and the money received by firms from the sale of goods and services is used to pay for the factors of production. Therefore, the correct option is A as it includes the flow of expenditure and income throughout the economy.

Question 15

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

Accepted Answer

Consumption goods are goods that are purchased for immediate consumption and are bought and sold in the goods markets in the circular flow model. The financial market deals with financial assets such as stocks, bonds, and loans. Factor markets refer to the market where factors of production such as labor and capital are bought and sold. Government market refers to the market where the government buys goods and services. Monetary flows refer to the flow of money in an economy.

Question 16

The emerging market economies are

Accepted Answer

Emerging market economies are countries that are transitioning from state-owned production to free markets. They generally have lower per capita income and are experiencing rapid industrialization and economic growth. China and India are examples of emerging market economies, but not all emerging market economies are located in Asia.

Question 17

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 18

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

Accepted Answer

The circular flow model shows that households are the primary purchasers of goods and services produced by firms. Thus, a choice that households make is how many goods and services they will purchase, which directly influences the level of production and economic activity in the economy. Choices A, D, and E are also important decisions made by households, but they are more indirect and have less direct impact on the overall economy than the amount of goods and services households choose to purchase.

Question 19

The circular flow model shows the

Accepted Answer

The circular flow model demonstrates how households, firms, and governments interact through the flow of expenditures and incomes. It shows how goods and services are traded in markets, how individuals provide labor and other inputs to firms, how government collects taxes and spends on public goods and services, and how income is distributed across the economy. The model helps to explain macroeconomic phenomena such as economic growth, inflation, and unemployment.

Question 20

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.

Quiz 2: The Usand Global Economies