Economics Basics: Firms, Government, and Markets
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Economics Basics: Firms, Government, and Markets

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Questions and Answers

What is the role of households in the resource market?

  • They demand resources from firms
  • They supply resources to the government (correct)
  • They finance government activities
  • They produce goods and services

    • In the product market, what is the role of firms?

  • They provide public services
  • They tax households and firms
  • They supply goods and services to households (correct)
  • They demand goods and services from households

    • What is the primary source of finance for the government?

  • The resource market supplying goods
  • Firms and the government producing goods
  • Households and firms paying taxes (correct)
  • Households and firms providing resources

    • What is the role of the government in the product market?

    <p>It supplies goods and services to households</p> Signup and view all the answers

    What is the interaction between firms and households in the product market?

    <p>Firms supply goods and services to households</p> Signup and view all the answers

    What is the primary function of resource markets?

    <p>To facilitate the exchange of resources</p> Signup and view all the answers

    In the circular flow model, what is represented by the double-lined directed arrows?

    <p>Flow of real items</p> Signup and view all the answers

    What is the primary role of the government in the economy?

    <p>To control or influence households, firms, and markets</p> Signup and view all the answers

    What do firms pay to resource suppliers in the resource market?

    <p>Cost of production</p> Signup and view all the answers

    In the three-sector circular flow model, what is the third sector that is added to the simple model?

    <p>Government</p> Signup and view all the answers

    What is the outcome of firms combining resources and producing goods and services?

    <p>Supply of goods and services</p> Signup and view all the answers

    What is the primary mechanism of economic coordination in a pure capitalist system?

    <p>Market mechanisms</p> Signup and view all the answers

    What is a major disadvantage of a pure capitalist system?

    <p>Market failure</p> Signup and view all the answers

    What is the primary role of the government in a command economy?

    <p>To coordinate and direct economic activities through a central planning committee</p> Signup and view all the answers

    What is the main function of a firm in a mixed economy?

    <p>To use economic resources to produce goods and services</p> Signup and view all the answers

    What is the main role of households in a mixed economy?

    <p>To make decisions on selling resources and buying goods and services</p> Signup and view all the answers

    How many decision-making units are typically present in a closed economy?

    <p>3</p> Signup and view all the answers

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