5) Margo orders a MacBook Pro computer from The Apple Store online to use it in her
graphic design business. How will this be relected in the igure above?
A) as a low of a factor of production
B) as a low of goods and services bought
C) as expenditures on goods and services
D) as goods and services supplied
E) It won’t be shown in the igure because this transaction takes place neither in goods
markets nor in factor markets.
Skill: Level 3: Using models
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
61
The igure above shows governments in the circular low.
6) In the igure above, households
A) receive transfers directly from governments.
B) buy goods and services from governments in goods markets.
C) receive transfers from governments through factor markets.
D) sell factors of production to governments.
E) pay taxes to governments through factor markets.
Skill: Level 3: Using models
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
62
7) In the igure above, irms
A) pay taxes directly to governments.
B) sell goods and services to governments in goods markets.
C) receive transfers from governments through factor markets.
D) own factors of production.
E) do all of the above.
Skill: Level 3: Using models
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
8) In the igure above, governments
A) collect taxes.
B) coordinate economic activities of households and irms.
C) hire factors of production.
D) own factors of production.
E) sell goods and services to household.
Skill: Level 3: Using models
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
9) In the igure above, which of the following is true?
i. Governments coordinate economic activities of households and irms.
ii. Governments buy goods and services in goods markets.
iii. Households pay taxes directly to irms.
A) only ii
B) only i
C) only iii
D) i and ii
E) ii and iii
Skill: Level 3: Using models
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
63
10) Social Security tax is deducted from your paycheck. In the igure above, this will be
shown as
A) taxes lowing from households to governments.
B) taxes lowing from irms to governments.
C) taxes lowing from households to irms.
D) wages lowing from irms to households.
E) wages lowing from irms to governments.
Skill: Level 3: Using models
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
2.6 Essay: What, How, and For Whom?
1) It is conventional to divide the nation‘s total production into four categories. Name and
explain the four categories. In the United States, which category accounts for the largest
share and the smallest share of the nation’s total production?
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Written and oral communication
2) Explain the diference between consumption and capital goods.
Skill: Level 3: Using models
Section: Checkpoint 2.1
Status: Old
AACSB: Written and oral communication
64
3) Identify the four factors of production, and tell what type of income is earned by each
factor.
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
4) What are the payments each factor of production receives?
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
5) What is meant by the term “human capital”?
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
6) What efect, if any, will a good college education have on your human capital? Explain
your answer.
Skill: Level 3: Using models
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
65
7) Explain the diferences between “human capital,” “inancial capital,” and “capital.”
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
8) What is the diference between “capital” and “inancial capital”? Which is a factor of
production?
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
9) What is the diference between the functional and the personal distribution of income?
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
10) In the United States, which factor of production earns the largest share of the nation’s
total income?
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
66
11) In the United States, how does the income received by the richest 20 percent of
individuals compare with the income received by the other 80 percent?
Skill: Level 1: Deinition
Section: Checkpoint 2.1
Status: Old
AACSB: Relective thinking
2.7 Essay: The Global Economy
1) Compare and contrast the world population with that of the United States. Is the United
States becoming a larger or a smaller part of the world’s population?
Skill: Level 2: Using deinitions
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
2) How many and what fraction of the world’s people live in advanced economies? In
emerging market and developing economies?
Skill: Level 1: Deinition
Section: Checkpoint 2.2
Status: Old
AACSB: Relective thinking
67