Which of the following is an example of a leakage into the circular flow of income and expenditure?
a. Saving
b. Exports
c. Government expenditure on goods
d. Transfer payments
e. Investment by firms
QUESTION 2Suppose a firm can hire 100 workers at 8.00 per hour but must pay 8.05 per hour to hire 101 workers. Marginal factor cost (MFC) for the 101st worker is approximately equal to:
a. 8.00.
b. 8.05.
c. 13.05.
d. 13.00.
QUESTION 3The effect of automatic stabilizers on the business cycle is to:
a. make upswings larger and downswings smaller.
b. make upswings smaller and downswings larger.
c. make both upswings and downswings smaller.
d. eliminate fiscal drag.
e. make both upswings and downswings larger.
QUESTION 4Which of the following is an example of an injection into the circular flow of income and expenditure?
a. Consumption
b. Exports
c. Taxes
d. Saving
e. Government borrowing
QUESTION 5Given the same marginal revenue product (MRP) and supply curves, the equilibrium quantity of labor employed in a monopsonistic labor market will be:
a. equal to that in a competitive labor market.
b. less than that in a competitive labor market.
c. greater than that in a competitive labor market.
d. there is insufficient information for a conclusion.
QUESTION 6Which of the following is an automatic stabilizer?
a. Unemployment insurance
b. Government spending
c. Net taxes
d. The interest rate
e. The minimum wage set by the government
QUESTION 7Which of the following is an example of an injection into the circular flow of income and expenditure?
a. Government spending
b. Imports
c. Disposable income
d. Net taxes
e. Saving
QUESTION 8A monopsonist's marginal factor cost (MFC) curve lies above its supply curve because the firm must:
a. lower the factor price to hire more.
b. increase the price of its product to sell more.
c. increase the factor price to hire more.
d. lower the product price to sell more.