Which of the Following Statements About the Circular Flow Diagram

question 239

Multiple Choice

Which of the following statements about the circular flow diagram is not correct?

• A)Households receive income from the resource market;they save some of it and spend the rest of it on domestic or foreign goods and services.
• B)The loanable funds market takes net household savings and channels it in part to the government and in part to businesses for investment.
• C)Expenditures on GDP are equal to consumption plus government purchases plus investment plus net exports (exports minus imports).
• D)The net inflow of capital from foreign economies must always be positive and equal to the amount of business investment.

---

Definitions:

Hersey and Blanchard

Psychologists who developed the Situational Leadership Model, which suggests that the most effective leadership style varies depending on the maturity level of team members.

Situational Leadership Model

A leadership theory proposing that effective leadership varies according to, and must adapt to, the needs of the situation and the readiness of the team being led.

Delegating

The act of assigning responsibility and authority to another person to carry out specific activities, while the delegator retains overall responsibility for the outcome.

Hersey-Blanchard Situational Leadership Model

A theory that suggests the most effective leadership style varies according to the task at hand and the maturity level of the team or individual being led.