Thinking Like an Economist 243
79.
In the circular-flow diagram, another name for goods and services produced by firms is
a.
factors of production.
b.
output.
c.
inputs.
d.
resources.
80.
Which markets are represented in the simple circular-flow diagram?
a.
markets for goods and services and markets for financial assets
b.
markets for factors of production and markets for financial assets
c.
markets for goods and services and markets for factors of production
d.
markets for goods and services and markets for imports and exports
81.
In the markets for goods and services in the circular-flow diagram,
a.
households and firms are both buyers.
b.
households and firms are both sellers.
c.
households are buyers and firms are sellers.
d.
households are sellers and firms are buyers.
82.
In the circular-flow diagram, in the markets for
a.
goods and services, households and firms are both sellers.
b.
goods and services, households are buyers and firms are sellers.
c.
the factors of production, households are buyers and firms are sellers.
d.
the factors of production, households and firms are both buyers.
Thinking Like an Economist 245
83.
In the circular-flow diagram, in the markets for
a.
goods and services, households and firms are both sellers.
b.
goods and services, households are sellers and firms are buyers.
c.
the factors of production, households are sellers and firms are buyers.
d.
the factors of production, households and firms are both buyers.
84.
In the markets for goods and services in the circular-flow diagram,
a.
households provide firms with savings for investment.
b.
households provide firms with labor, land, and capital.
c.
firms provide households with output.
d.
firms provide households with profit.
85.
In the markets for the factors of production in the circular-flow diagram,
a.
households are sellers and firms are buyers.
b.
households are buyers and firms are sellers.
c.
households and firms are both buyers.
d.
households and firms are both sellers.
86.
In the markets for factors of production in the circular-flow diagram,
a.
households provide firms with labor, land, and capital.
b.
households provide firms with savings for investment.
c.
firms provide households with goods and services.
d.
firms provide households with revenue.
87.
Which of the following transactions does not take place in the markets for factors of production in
the circular-flow
diagram?
a.
a landowner leases land to a farmer
b.
a farmer hires a teenager to help with harvest
c.
a construction company rents trucks for its business
d.
a woman buys corn for dinner
88.
Which of the following transactions takes place in the markets for the factors of production in the
circular-flow
diagram?
a.
Dylan receives a salary for his work as a financial analyst for an investment firm.
b.
Kristin buys two business suits to wear to her job as a Chief Information Officer.
c.
Jim receives clean water in his home in exchange for paying his water bill.
d.
Caroline owns a nail salon and receives payments from her clients for her services.
89.
In the circular-flow diagram,
a.
firms are buyers in the markets for goods and services.
b.
households are sellers in the markets for the factors of production.
c.
firms are sellers in the markets for factors of production and in the markets for goods and
services.
d.
dollars that are spent on goods and services flow directly from firms to households.
90.
The two loops in the circular-flow diagram represent
a.
the flow of goods and the flow of services.
b.
the flow of dollars and the flow of financial assets.
c.
the flow of inputs into production processes and the flow of outputs from production processes.
d.
the flows of inputs and outputs and the flow of dollars.
91.
The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which
of the following
does not appear on the outer loop?
a.
wages
b.
income
c.
capital
d.
rent
92.
The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of
the following does
not appear on the inner loop?
a.
wages
b.
land
c.
capital
d.
goods and services sold
93.
In the circular-flow diagram,
a.
profit flows from households to firms.
b.
labor flows from households to firms.
c.
services flow from households to firms.
d.
All of the above are correct.
94.
In the circular-flow diagram,
a.
taxes flow from households to firms, and transfer payments flow from firms to households.
b.
income payments flow from firms to households, and sales revenue flows from households to
firms.
c.
resources flow from firms to households, and goods and services flow from households to
firms.
d.
inputs and outputs flow in the same direction as the flow of dollars, from firms to households.
95.
In the circular-flow diagram,
a.
factors of production flow from government to firms.
b.
goods and services flow from households to firms.
c.
income paid to the factors of production flows from firms to households.
d.
spending on goods and services flows from firms to households.
96.
In the circular-flow diagram, which of the following items does not flow from households to
firms?
a.
revenue
b.
land, labor, and capital
c.
factors of production
d.
profit
97.
In the circular-flow diagram, which of the following items does not flow from firms to households?
a.
goods
b.
services
c.
capital
d.
profit
98.
In the circular-flow diagram, which of the following items flows from households to firms through
the markets for
goods and services?
a.
goods and services
b.
dollars paid to land, labor, and capital
c.
dollars spent on goods and services
d.
wages, rent, and profit
99.
In the circular-flow diagram, which of the following items flows from firms to households through
the markets for
goods and services?
a.
goods and services
b.
dollars paid to land, labor, and capital
c.
dollars spent on goods and services
d.
wages, rent, and profit
100.
In the circular-flow diagram, which of the following items flows from firms to households through
the markets for
the factors of production?
a.
goods and services
b.
land, labor, and capital
c.
dollars spent on goods and services
d.
wages, rent, and profit
101.
In the circular-flow diagram, which of the following items flows from households to firms through
the markets for
the factors of production?
a.
goods and services
b.
land, labor, and capital
c.
dollars spent on goods and services
d.
wages, rent, and profit
102.
In the circular-flow diagram, which of the following items represents a payment for a factor of
production?
a.
interest
b.
capital
c.
spending by households on goods
d.
spending by households on services
Thinking Like an Economist 255
103.
In the simple circular flow diagram, the flow of money from the firms to the markets for factors
of production is
called
a.
spending.
b.
revenue.
c.
income.
d.
wages, rent, and profit.
104.
In the simple circular flow diagram, the flow of money from the markets for goods and services
to the firms is
called
a.
spending.
b.
revenue.
c.
income.
d.
wages, rent, and profit.
105.
Among economic models, the circular-flow diagram is unusual in that it
a.
drastically simplifies the real world.
b.
features more than one type of market.
c.
features flows of dollars.
d.
does not involve mathematics.
106.
According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day
Flower Company,
she participates
a.
in the markets for factors of production exchanging labor for income.
b.
in the markets for factors of production exchanging flowers for revenue.
c.
in the markets for goods and services exchanging flowers for wages, rent, and profit.
d.
in the markets for goods and services exchanging labor for income.
Thinking Like an Economist 257
107.
According to the circular flow diagram, if Denny is the owner of a landscaping business and he
just received $50 for mowing Mrs. Pendleton’s lawn,
a.
the $50 represents a cost of production for Denny’s firm.
b.
the $50 represents wages, rent, and profit to Denny’s firm.
c.
Denny acts as a firm who interacted in the markets for factors of production with Mrs.
Pendleton.
d.
Denny acts as a firm who interacted in the markets for goods and services with Mrs.
Pendleton.
Figure 2-1
258 Thinking Like an Economist
108.
Refer to Figure 2-1. Which arrow represents the flow of goods and services?
a.
A
b.
B
c.
C
d.
D
109.
Refer to Figure 2-1. Which arrow represents the flow of spending by households?
a.
A
b.
B
c.
C
d.
D
110.
Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?
a.
A
b.
B
c.
C
d.
D
111.
Refer to Figure 2-1. Which arrow represents the flow of income payments?
a.
A
b.
B
c.
C
d.
D
112.
Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows
does this
transaction directly contribute?
a.
A only
b.
A and B
c.
C only
d.
C and D
113.
Refer to Figure 2-1. Harvey receives his first paycheck for working as an ice cream vendor.
To which of the
arrows does this transaction directly contribute?
a.
B only
b.
A and B
c.
C only
d.
C and D
Thinking Like an Economist 261
Figure 2-2
114.
Refer to Figure 2-2. Boxes A and B of this circular-flow diagram represent
a.
firms and households.
b.
households and government.
c.
the markets for goods and services and the markets for financial assets.
d.
the markets for goods and the markets for services.
115.
Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent
a.
households and government.
b.
firms and government.
c.
the markets for goods and services and the markets for financial assets.
d.
the markets for goods and services and the markets for factors of production.
116.
Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box
represents
households?
a.
Box B
b.
Box C
c.
Box D
d.
Any one of the other boxes (B, C, or D) could represent households.
117.
Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this
circular–flow diagram,
then
a.
Box D must represent the markets for factors of production.
b.
Box C must represent the markets for goods and services.
c.
firms are buyers in the markets represented by Box D.
d.
All of the above are correct.