The Following Question Are Based on the Following Circular Flow

question 4

Multiple Choice

The following question are based on the following circular flow diagram:

-In a simple circular flow model of an economy

• A) households buy factors of production from businesses.
• B) the flow of income to households from businesses is greater than the flow of expenditures by households for goods produced by businesses.
• C) businesses buy final goods and services produced by households.
• D) the total amount of labor hours worked equals the total number of goods produced.
• E) households are owners of resources and purchasers of final goods and services.

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Definitions:

Domestic Price

The price of goods or services within a country, which may differ from international prices due to tariffs, subsidies, or other domestic policies.

World Price

The global market price of a product or service, determined by worldwide demand and supply.

Infant Industries

New or emerging industries in the early stages of development, often considered needing protection from international competition to grow.

Protectionism

Economic policy of restricting imports from other countries through methods such as tariffs and import quotas, to protect domestic industries.