Economics: Principles & Policy
14th Edition
ISBN: 9781337912679
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning US
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Question
Chapter 24, Problem 2DQ
To determine
The circular flow of an economy.
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Early during the COVID-19 pandemic, the government used multiple stimulus packages to increase government
spending.
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This question is complete. The graph provides all the information.
Use the graph to the right to answer the following question. Which of the following is not true according to the graph?
A) Taxpayers in the top 1% of income levels paid more money in income taxes than they would have without the tax cuts.
B) The treasury estimate if the share of tax cuts had not been enacted is 34%.
C) Taxpayers in the top 1% of income levels paid a greater percentage of total federal income tax revenue than they would have without the tax cuts.
What is the importance of the circular-flow diagram?
Chapter 24 Solutions
Economics: Principles & Policy
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Similar questions
- Tyson and Ella work at the Ruby Red Movie Theater in town. After work, they decide to watch a movie. After purchasing their tickets, they stop by the concession stand and purchase popcorn, drinks, and candy. Use the circular flow diagram to describe the purchases that Tyson and Ella made and the services and goods that were provided to them.arrow_forwardIn the circular flow diagram, households get their ability to pay for their consumption expenditures from the revenues they receive for their products. costs they incur for resources. incomes they earn for their resources. goods and services they get in the product markets.arrow_forwardAfghanistan didn't buy covid vaccine or produce covid vaccine and what is the impact to the economy? explain in diagram and 2 graphsarrow_forward
- b) Economy can be represented by economic models. One of the models we use to understand economy is a “Circular Flow Diagram”. Sketch a Circular flow model and explain the flow of money and flow of goods and services and factors of production caused by the following activities. i. Kaleem pays a shopkeeper Rs.150 for a liter of milk. ii. Mustaqeem while working at a fast-food restaurant earns Rs.500 per hour. iii. Sana spends Rs.500 on a haircut. iv. Mustafa receives Rs.200,000 from his 10 percent ownership of Salman Chemicals Ltd.arrow_forward1. Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow of goods and services and the flow of dollars for each of the following activities. a. Selena pays a storekeeper $1 for a liter of milk. b. Stuart earns $4.50 per hour working at a fast-food restaurant. c. Shanna spends $30 to get a haircut. d. Salma earns $10,000 from her 10% ownership of Acme Industrial.arrow_forwardHomework (Ch 02) The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production purchase in product markets. Based on this model, firms earn revenue when Suppose Lucia earns $550 per week working as a corporate attorney for Rowan and Martin Associates. She uses $10 to buy a box of aspirin at Pillmart F11 F12 F7 F10 F8 F9 26 2 Fn Lockarrow_forward
- Part A: Give a specific example of something a household would buy or sell in the product market. Part B: In the circular flow diagram, what is a specific example of what you would buy or sell in the factor market.arrow_forwardThe economy of Sydaveria has developed, and the inhabitants use money in the form of shells. Draw a circular flow diagram showing households, firms, factors and markets. Firms produce fish and potatoes. Households provide land and labor to firms. Describe how the impact of each of the following events would spread around the circle. A devasting hurricane floods many of the potato fields. A very productive fishing season leads to a large increase in fish caught. The inhabitants of Sydaveria discover High School Musical and spend several months at festivals dedicated to singing and dancing to the soundtrack.arrow_forwardDraw a simple circular flow diagram (without government) and use the relationships shown in the diagram to explain how producers’ optimism about future sales can lead to an increase in future sales.arrow_forward
- Question 1 Classify the following as microeconomics or macroeconomics and provide a justification for your choice. Parliament is debating the option of implementing a Value Added Tax (VAT) as a means to cut the government deficit. Choose... Choose... The effect of government spending on the nation's unemployment rate. Micro, examining one firm in the economy Macro, examining the entire economy. Micro, examining one sector of the economy The Bureau of Labour Statistics projects a 22.5% increase in the number of workers in Choose... the healthcare industry from 2008 to 2018. A firm's decision about how many workers Choose... to hire Please answer all parts of the question.arrow_forwardquestion 2 macroeconicsarrow_forward7.2 Draw a circular flow diagram showing the flow of factors of production and goods and services between households, businesses and the government.arrow_forward
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