Which of the Following Statements About the Circular-Flow Diagram Is

question 227

Multiple Choice

Which of the following statements about the circular-flow diagram is correct?

• A)One must imagine that the economy operates without money in order to make sense of the diagram.
• B)The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms.
• C)The government cannot be excluded as a decision maker in a circular-flow diagram.
• D)All of the above are correct.

Describe the effects of minimum wage laws on employment and labor market equilibrium.

Understand the long-term relationship between wage rates, real earnings, and productivity.

Discuss the economic impact of occupational licensing on labor markets.

Recognize the differences between nominal wages, real wages, and how they affect the labor market.

---

Definitions:

Market Price

The ongoing rate at which a product or service is traded in a certain market.

Ownership Position

The share or portion of a company or property owned by an individual or entity, often expressed as a percentage of the total available shares.

Shares Outstanding

The total number of shares of a company's stock that are currently owned by all shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Market Price

The immediate market rate for purchasing or selling an asset or service.