What are the two basic markets in the simple circular

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62.What are the two basic markets in the simple circular-flow model?(A) the product market and the resource market(B) the export market and the product market(C) the export market and the import market(D) the household market and the business marketAnswer : (A)
63.In the resource market, how do households and firms interact with each other?
64.In the circular-flow model, what does the flow of expenditures measure?
65.What is the function of the circular flow model?
66.Which of the following is the largest component of GDP?(A) investment (I)(B) government spending (G)(C) consumption (C)(D) net exports (X ?2- M)Answer : (C)
67.Suppose that the economy is in equilibrium, with a trade surplus and with investment greaterthan saving. According to the circular-flow model, what is the state of the government's budget?
68.Suppose that the economy is in equilibrium, with a trade deficit and with saving greater thaninvestment. According to the circular-flow model, what is the state of the government's budget?
69.Suppose that the economy is in equilibrium, with the government budget in deficit and withsaving less than investment. According to the circular-flow model, how do imports relate to exports?
70.Suppose that the economy is in equilibrium, with the government budget in surplus and withsaving greater than investment. According to the circular-flow model, how do imports relate toexports?(A) Imports must exceed exports.(B) Imports must be less than exports.(C) Imports must equal exports.(D) Imports could be greater than or equal to exports.Answer : (B)

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