CHAPTER 23 - Chapter23 1 Inthe circular flow model,the...

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Measuring a Nation’s Income 1. In the circular flow model, the source of the factors of production  used  to create goods and  services  is a. the product  market. b. the resource market. c. firms. d. households. ANSWER: d households. SECTION: 1 OBJECTIVE: 1 2. In the circular flow model, firms use the money they earn from selling their goods and  services to  pay for the a. goods and  services they buy on the product  market. b. resources they buy on the product  market. c. goods and  services they buy from government. d. resources they buy in the factor market. ANSWER: d resources they buy in the factor market. SECTION: 1 OBJECTIVE: 1 3. In the circular flow model, for every flow of goods, services, and  resources there is a counter-flow  of a. more goods, services, and  resources. b. people from firms to households. c. people from households  to firms. d. money. ANSWER: d money. SECTION: 1 OBJECTIVE: 1 4. In producing  a sweater, a man  who shears sheep pays a farmer $4 for a sheep. The shearing shop  sells the wool to a knitting mill for $7. The knitting mill buys he wool and  makes it into a fine fabric  and  sells it to a sweater-making firm for $13. The sweater-making  firm sells the sweater to a  clothing store for $20, and  the clothing store sells the sweater, gift wrapped,  for $50. What is the  contribution  to GDP of the previous sales transactions? a. $4. b. $44. c. $50. d. $94. ANSWER: c $50. SECTION: 2 OBJECTIVE: 2 5. Susie grows corn in her backyard  garden  to feed her family. The corn she grows is not counted  in  GDP because a. it was not produced  for the marketplace. b. it is an intermediate  good  which Susie will process further. c. the corn has no value. d. it reduces the amount  of corn she will buy at the store. ANSWER: a
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This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

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CHAPTER 23 - Chapter23 1 Inthe circular flow model,the...

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