Which of the following best characterizes the circular flow of income? Businesses buy resources from the government, and households buy goods and services from businesses. Businesses buy resources from households, and households use the money from the sale of resources to buy goods and services from businesses. Households buy factors of production from businesses, and businesses buy goods and services from households. The government purchases resources from businesses and households and then sells goods and services to businesses and households.

Which of the following best characterizes the circular flow of income? Businesses buy resources from the government, and households buy goods and services from businesses. Businesses buy resources from households, and households use the money from the sale of resources to buy goods and services from businesses. Households buy factors of production from businesses, and businesses buy goods and services from households. The government purchases resources from businesses and households and then sells goods and services to businesses and households.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter5: An Introduction To Macroeconomics

Section: Chapter Questions

Problem 3TY

See similar textbooks

Similar questions

Explain the circular flow between the household sector, firms sector, financial market, and government sector. [Hint: the government sector also acts as both a consumer and a firm. As a consumer, it spends on goods and services produced by firms. As a producer, it produces goods and services for the economy. The government also saves and borrows from the financial market].
with the aid of a diagram, explain the income and expenditure model
Using any model you wish, explain what might be the consequences for the circular flow of income of: (a) an increase in government spending; (b) an increase in tax revenue.
In the context of the circular flow model of the economy, which of the following best describes the relationshipbetween households, businesses, and the government?A. Households earn income by buying goods and services in the product market, spend that incomeon businesses, and pay taxes to the government, which then uses the revenue to provideresources.B. Households earn income by providing resources, spend that income on goods and services in theproduct market, and pay taxes to the government, which then uses the revenue for public services.C. Households earn income by paying taxes to the government, which then uses that revenue to buygoods and services from businesses, and businesses use the income to pay wages to households.D. Households earn income by providing resources to the government, which then redistributes thatincome among businesses to stimulate production and spending.
What are the major forms of household income? Contrast the wage and salary share to the profit share in terms of relative size. Distinguish between a durable consumer good and a nondurable consumer good. How does the combined spending on both types of consumer goods compare to the spending on services?
Use the information in the table below to answer Q.3.1 to Q.3.3:GDP at market prices R397bnNet primary income payments to the rest ofthe worldR37bnIndirect taxes R23bnSubsidies R11bn Consumption of fixed capital R32bn Q.3.3 Calculate the value of net national income (NNI) at factor cost.
Suppose the data BELOW is for a given year from the annual Economic Report of the President. Calculate GDP using the expenditure approach (Amount in billions of dollars): Corporate profits: $ 305Depreciation: $ 479Gross private domestic investment: $716Personal taxes: $ 565Personal saving: $120Government spending: 924Imports: $ 547Exports: $ 427Personal consumption expenditures: $ 2,966Indirect business taxes: $ 370Contributions for Social Security (FICA): $ 394Transfer payments and other income: $ 967