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Circular Flow Model and Classical Theory Quiz

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Circular Flow Model and Classical Theory Quiz

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Questions and Answers

Which of the following is the focus of the classical theory in a closed economy?

Applications
Case study
The model
The interest rate (correct)

Which interest rate represents the return on savings or cost of debt in terms of purchasing power?

The average interest rate
The effective interest rate
The nominal interest rate
The real interest rate (correct)

According to the circular flow model for a closed economy, what is the exogenous variable in the long run?

Applications
The interest rate
The level of output (Y) (correct)
The model

What does the nominal interest rate represent?

The return on savings or cost of debt in terms of purchasing power (C) Signup and view all the answers

What does the real interest rate represent?

The return on savings or cost of debt in terms of purchasing power (D) Signup and view all the answers

What are the four main components of the circular flow model for a closed economy?

The interest rate, the model, applications, and case study Signup and view all the answers

What does the nominal interest rate represent?

The nominal interest rate represents the nominal return on savings or nominal cost of debt in terms of percentage Signup and view all the answers

What does the real interest rate represent?

The real interest rate represents the real return on savings or real cost of debt in terms of percentage, i.e. the return on savings or cost of debt in terms of purchasing power Signup and view all the answers

What is the focus of the classical theory in a closed economy in the long run?

The focus of the classical theory in a closed economy in the long run is on equilibrating forces in the goods market Signup and view all the answers

What is the exogenous variable in the long run according to the circular flow model for a closed economy?

In the long run, the exogenous variable is the level of income (Y) Signup and view all the answers

Circular Flow Model and Classical Theory Quiz

Choose a study mode

Podcast

Questions and Answers

Which of the following is the focus of the classical theory in a closed economy?

Which interest rate represents the return on savings or cost of debt in terms of purchasing power?

According to the circular flow model for a closed economy, what is the exogenous variable in the long run?

What does the nominal interest rate represent?

What does the real interest rate represent?

What are the four main components of the circular flow model for a closed economy?

What does the nominal interest rate represent?

What does the real interest rate represent?

What is the focus of the classical theory in a closed economy in the long run?

What is the exogenous variable in the long run according to the circular flow model for a closed economy?

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