12 Questions
In the circular flow of income model, what is the main difference between flows and stocks?
Flows represent a change in stock variables, while stocks have no flow counterpart.
Which of the following is NOT a real flow in an economy as explained by the circular flow of income model?
Flows of taxes and wages
What is the purpose of the circular flow of income model in macroeconomics?
To determine the overall level of income and output in a nation
Which market consists of financial institutions that engage in borrowing and lending money?
Financial market
According to the circular flow of income model, what is the main assumption about households' spending behavior?
Households spend all their income on goods and services produced.
What is the significance of the 'real flows' concept in the circular flow of income model?
'Real flows' encompass exchanges of factors of production and goods/services.
What is the main focus of Macroeconomics?
Examining the entire economy as a whole
Which of the following is a static concept according to the text?
Money supply
Who introduced the alternative theory to explain the determination of employment and output?
Keynes
Which school of thought includes the theories of David Ricardo and J.S. Mill?
Classical School of thoughts
Which concept has a time dimension and is measured over a period of time?
Flow
Which theory assigns a critical role to money in the economy?
Monetarism
Explore the fundamental concepts of Macroeconomics, which focuses on studying the behavior of the entire economy and its agents as a whole. Learn about national income, aggregate supply, total employment, and more.
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