30 Questions
In the basic circular flow model, which unit acts as the resource providers and the consuming unit?
Households (HH)
What do business firms (BF) do with the resources they acquire from households in the circular flow model?
Transform them into goods and services
Where do the activities of buying and selling factors of production or resources take place in the circular flow model?
Factor or Resource Market
What type of flow consists of the resources flowing from households to business firms in the circular flow model?
Physical flow
Which unit receives factor payments in the circular flow model?
Households (HH)
Where do the activities of buying and selling goods & services or products occur in the circular flow model?
Goods & Services Market
What is a key focus of macroeconomics according to the text?
Consumer behavior and policies
Which of the following is NOT a macroeconomic variable mentioned in the text?
Stock market trends
What are the main components of the Multi-Sectoral Circular Flow Model that affect the level of money supply?
Leakages and Injections
What is considered one of the important determinants of the overall level of economic activity in the short run?
Spending by different sectors
Which model is mentioned as a simple way to understand the process of economic interactions?
Circular flow diagram or model
Which policy aims to decrease the level of money supply in the economy?
Contractionary Monetary Policy
According to Sloman & Jones, which of the following is considered part of the macroeconomic environment of business?
Aggregate output & economic growth
What is the main fiscal tool in Fiscal Policy?
Deficit Budget
In Trade Policy, what does an Unfavorable Balance of Trade imply?
Exports are lesser than Imports (X < M)
Why is it necessary to reduce complicated details to manageable essentials in studying major economic issues?
To simplify complex interactions for better understanding
According to Blanchard and Johnson, what are the 3 core Macroeconomic Variables?
GDP, Unemployment Rate, Inflation Rate
In the Short-run period, what primarily affects movements in aggregate output?
Changes in Demand
What is the profit of Firm 1 (STEEL CO.) after selling steel to Firm 2?
$20
What is the total value-added in the economy during the given period?
$200
What portion of the $200 revenue from car sales goes to workers in Firm 2 (CAR CO.)?
$70
What is the value-added of Firm 2 (CAR CO.) according to the text?
$50
How much of the value added by Firm 1 goes to workers?
$80
What are the total expenses of Steel & Car Company (summed as one entity)?
$170
What is the formula for calculating Real GDP?
Real GDP = Nominal GDP / GDP Deflator
What does the GDP growth rate equation represent?
Percentage change in the value of goods and services produced over two periods
What is the significance of expansions and recessions in GDP?
Expansions are periods of positive GDP growth, while recessions are periods of negative GDP growth
What does Per Capita GDP measure?
The average income per individual in an economy
How is Net Domestic Product calculated?
Gross Domestic Product - Depreciation Allowance
What does Net Domestic Investment represent?
(Gross Domestic Investment - Depreciation Allowance)
Test your knowledge on the multi-sectoral circular flow model, including concepts like leakages, injections, monetary policy, fiscal policy, and trade policy. Understand how different policies affect the level of money supply in the economy.
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