CHAPTER 2 The Market System and the Circular Flow

121. The money income of households consists of the sum of:
A) wages plus
salaries.
B) consumption
expenditures plus profits.
C) wages plus
rents plus interest plus profits.
D) consumption
expenditures plus costs of resources.

122. Which of the
following would be primarily determined in the resource market?
A) the price of compact discs
B) the wage rates for electricians
C) the number of automobiles produced
D) the amount of money in circulation

123. The fact that
expenditures on products and payments to owners of resources used to produce
those products flow in opposite directions is known as:
A) roundabout production.
B) a barter economy.
C) a pure economy.
D) the circular flow of income.

Use
the following to answer questions 124-130:

.jpg”>

124. Refer to the above
figure. If box B represents the resource market and flow (3) represents money
income, then:
A) box A is
the product market and box C is households.
B) box C is the
product market and box A is households.
C) box D is
the product market and box C is households.
D) box C is
the product market and box D is households.

125. Refer to the above
figure. If box A represents businesses and flow (7) represents goods and
services, then:
A) box D is
the product market and box B is the resource market.
B) box D is
the product market and box B is households.
C) box B is
the product market and box C is households.
D) box C is
the product market and box B is the resource market.

126. Refer to the above
figure. If flow (1) is the cost businesses pay to the resource market, then:
A) (2) is the flow of productive resources.
B) (4) is the flow of goods and services.
C) (6) is the flow of money income.
D) (7) is the flow of revenue.

127. Refer to the above
figure. If box D represents the product market and flow (6) represents
consumption expenditures, then box C is:
A) households,
flow (7) is revenue, and flow (8) is goods and services.
B) businesses,
flow (7) is revenue, and flow (8) is goods and services.
C) households,
flow (7) is goods and services, and flow (8) is revenue.
D) businesses,
flow (7) is goods and services, and flow (8) is revenue.

128. Refer to the above
figure. If box A represents businesses and box B represents the resource market
in this circular flow model, then the real flow of goods, services, and
economic resources would be represented by flows:
A) (1), (3),
(6), and (8).
B) (7), (5),
(4), and (2).
C) (1), (2),
(3), and (4).
D) (5), (6),
(7), and (8).

129. Refer to the above
figure. If box A represents businesses and box D represents the product market
in this circular flow model, then money flow in the model would be represented
by:
A) (1), (2),
(3), and (4).
B) (5), (6),
(7), and (8).
C) (1), (3),
(6), and (8).
D) (7), (5),
(4), and (2).

130. Refer to the above
figure. If you know that flow (8) is revenues and flow (4) is economic
resources (land, labor, capital, and entrepreneurial ability), then box:
A) A is the
resource market and box B is the product market.
B) B is the
resource market and box A is the product market.
C) C is the
product market and box B is the resource market.
D) D is the
product market and box B is the resource market.