quanda02 - Chapter 2 1. Identify the parts of the...

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Practice Questions to accompany Mankiw & Taylor: Economics 1 Chapter 2 1. Identify the parts of the circular-flow diagram immediately involved in the following transactions. a. Mary buys a car from Jaguar for £40,000. Answer: £40,000 of spending from households to market for goods and services. Car moves from market for goods and services to household. £40,000 of revenue from market for goods and services to firms while car moves from firm to market for goods and services. b. Jaguar pays Joe £2,500/month for work on the assembly line. Answer: £2,500 of wages from firms to market for factors of production. Inputs move from market for factors of production to firms. Labour moves from households to market for factors of production while £2,500 income moves from market for factors to households. c. Joe makes £10 worth of calls on his Vodafone mobile phone. Answer: £10 of spending from households to market for goods and services. Service moves from market for goods and services to household. Service moves from firms to market for goods and services in return for £10 revenue. d.
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This note was uploaded on 07/06/2009 for the course BUS BAM303 taught by Professor Na during the Spring '09 term at 東京大学.

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quanda02 - Chapter 2 1. Identify the parts of the...

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