In the Markets for Factors of Production in the Circular-Flow

question 141

Multiple Choice

In the markets for factors of production in the circular-flow diagram,

• A) households provide firms with labor, land, and capital.
• B) households provide firms with savings for investment.
• C) firms provide households with goods and services.
• D) firms provide households with profit.

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Definitions:

Escalator Clauses

Contractual provisions allowing for an automatic increase in prices or wages under certain conditions, often tied to inflation rates or cost increases.

Scrap Disposal

The process of getting rid of waste materials, remnants, or byproducts from manufacturing or consumption.

Primary Metals

The unalloyed, pure forms of metals extracted directly from the earth through mining processes, which serve as the basic raw materials for metal production and manufacturing.

Price Fluctuation

Variability in the prices of goods and services over time due to factors like supply and demand dynamics, market conditions, and external economic influences.