The lower portion of the circular flow model contains factor markets in which households provide:
a. labor, money, and machines.
b. savings, spending, and investment.
c. natural resources, labor, and capital.
d. output of all final goods and services produced.
QUESTION 2The circular flow of economic activity is a model of the:
a. flow of goods, resources, payments, and expenditures between the sectors of the economy.
b. influence of government on business behavior.
c. influence of business on consumers.
d. role of unions and government in the economy.
QUESTION 3The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:
a. product market.
b. factor market.
c. savings market.
d. financial market.
QUESTION 4Gross domestic product is a measure of:
a. market value of a nation's capital assets (physical capital).
b. expenditures on and sales revenues derived from all goods and services exchanged during a period.
c. market value of the output produced during a period.
d. asset holdings of people and the happiness that they derived from the ownership of those assets.
QUESTION 5The largest component of GDP is:
a. personal consumption expenditures.
b. government spending.
c. durable goods.
d. net exports.
e. gross private domestic investment.
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