The term circular flow of income refers to:
The continuous flow of goods and services between households and firms in an economy
The circular flow of money between households and firms in an economy
The circular flow of resources between households and firms in an economy
The circular flow of exports and imports in an open economy
Correct Answer :
B. The circular flow of money between households and firms in an economy
Related Questions
The multiplier effect refers to:
The impact of an initial change in spending on aggregate demand and, consequently, on real GDP
The tendency of consumers to save a large portion of their income
The effect of an increase in the money supply on interest rates
The impact of inflation on purchasing power
The concept of crowding out refers to:
The decrease in private spending that occurs as a result of an increase in government spending
The increase in private investment that occurs as a result of government borrowing
The decrease in government spending that occurs during a recession
The increase in government spending that occurs during a boom
Which of the following is a measure of the responsiveness of quantity demanded to a change in price?
Price elasticity of demand
Cross-price elasticity of demand
Income elasticity of demand
Price elasticity of supply
The term inflationary gap refers to a situation where:
Actual output is less than potential output
Actual output is greater than potential output
The inflation rate is high
The unemployment rate is low
The term deficit spending refers to a situation where:
The government's expenditures exceed its revenues in a given period
The government's revenues exceed its expenditures in a given period
The government's expenditures are equal to its revenues in a given period
The government borrows money from the central bank
Which of the following is an example of fiscal policy?
The Federal Reserve adjusting interest rates
The government increasing spending on infrastructure projects
The government selling bonds to the public
The central bank conducting open market operations
The term long-run Phillips curve suggests that there is a trade-off between:
Inflation and unemployment in the long run
Inflation and output in the short run
Government spending and taxes
Monetary policy and fiscal policy
The term comparative advantage refers to:
The ability of one country to produce a good or service at a lower opportunity cost than another country
The ability of one country to produce a good or service with fewer resources than another country
The ability of one country to produce a good or service at a higher opportunity cost than another country
The ability of one country to produce all goods and services more efficiently than another country
The term deadweight loss refers to:
The loss of economic efficiency that occurs when a market is not in equilibrium
The loss of consumer surplus that occurs when prices increase
The loss of producer surplus that occurs when prices decrease
The loss of government revenue due to taxes
The term perfectly elastic demand refers to a situation where:
Consumers are willing to buy any quantity of a good at a given price
Consumers are only willing to buy a fixed quantity of a good at any price
The quantity demanded of a good does not change regardless of the price
The demand for a good is perfectly inelastic
The Phillips curve depicts the relationship between:
Inflation and unemployment
Government spending and taxes
Savings and investment
Consumption and income
The term tax incidence refers to:
The way in which the burden of a tax is shared between buyers and sellers in a market
The total amount of revenue collected by the government from taxes
The impact of a tax on the overall level of prices in an economy
The distribution of income among different households in an economy
If the government runs a budget deficit, it means that:
Government spending exceeds government revenue
Government revenue exceeds government spending
Government revenue and spending are equal
Taxes are too high
The term consumer surplus refers to:
The difference between the highest price a consumer is willing to pay for a good and the price they actually pay
The difference between the cost of production and the price at which a good is sold
The total amount of money spent by consumers on goods and services
The total amount of money earned by consumers from their jobs
The term real interest rate is:
The nominal interest rate adjusted for inflation
The interest rate charged by banks on loans
The interest rate earned on a savings account
The interest rate set by the central bank
The term capital stock in economics refers to:
The total amount of money in an economy
The total value of physical and human capital in an economy
The total amount of money held by households
The total amount of money held by businesses
The natural rate of unemployment is:
The level of unemployment that occurs when the economy is at full employment
The level of unemployment that occurs when the economy is in a recession
The level of unemployment that occurs when there is no frictional or structural unemployment
The level of unemployment that occurs when there is no cyclical unemployment
The term sticky prices refers to:
Prices that do not change quickly in response to changes in supply and demand
Prices that are set by the government and cannot be changed by firms
Prices that are adjusted continuously in response to changes in the economy
Prices that are set by monopolies to maximize profit
Which of the following is a tool of monetary policy used by the Federal Reserve?
Open market operations
Government spending
Taxation
Fiscal stimulus
The term frictional unemployment refers to unemployment that occurs due to:
Temporary transitions between jobs or careers
Mismatch between the skills of workers and the skills required by employers
Changes in aggregate demand
Fluctuations in the business cycle
If the government implements expansionary fiscal policy, it will likely lead to:
Higher inflation and higher economic growth
Lower inflation and lower economic growth
Higher inflation and lower economic growth
Lower inflation and higher economic growth
The term supply-side economics focuses on:
Policies that aim to increase the productive capacity of the economy
Policies that aim to increase aggregate demand in the economy
Policies that aim to control inflation through monetary policy
Policies that aim to control inflation through fiscal policy
The term tax multiplier refers to:
The change in output resulting from a change in government spending
The change in output resulting from a change in taxes
The change in consumption resulting from a change in disposable income
The change in investment resulting from a change in interest rates
If the government increases taxes and decreases government spending, it is implementing:
Contractionary fiscal policy
Expansionary fiscal policy
Contractionary monetary policy
Expansionary monetary policy
The aggregate demand curve shows the relationship between:
The price level and the quantity of real GDP demanded
The interest rate and investment spending
The price level and the quantity of money demanded
The exchange rate and net exports
If the government implements a policy of increasing the money supply to stimulate economic activity, it is employing:
Expansionary monetary policy
Contractionary monetary policy
Expansionary fiscal policy
Contractionary fiscal policy
If the economy is in a recessionary gap, it implies that:
Actual output is less than potential output
Actual output is greater than potential output
The inflation rate is high
The unemployment rate is low
The term real wage rate refers to:
The purchasing power of wages after accounting for inflation
The nominal wage rate adjusted for taxes
The average wage rate in an economy
The wage rate set by the government
The term trade surplus occurs when:
Exports exceed imports
Imports exceed exports
Both exports and imports are equal
Both exports and imports are zero
In macroeconomics, the term inflation refers to:
An increase in the overall price level of goods and services in an economy
A decrease in the overall price level of goods and services in an economy
An increase in the purchasing power of a currency
A decrease in the purchasing power of a currency