Exercise Topic 1&2 - Topic 1 & 2. Introduction to...

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Introduction to Macroeconomics 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. 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. 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. 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. Topic 1&2 - 1 -
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b. $44. c. $50. d. $94. 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.
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Exercise Topic 1&2 - Topic 1 & 2. Introduction to...

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