In the Circular Flow Model, Producers

question 51

Multiple Choice

In the circular flow model, producers

• A)sell goods and services in the input market.
• B)and households spend earnings from resource sales on goods and services in the factor market.
• C)hire resources sold by households in the factor market.
• D)spend earnings from resource sales on goods and services in the product market.

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Definitions:

M1

A category of the money supply that includes all physical money, such as coins and currency, as well as demand deposits, checking accounts, and negotiable order of withdrawal (NOW) accounts.

M2

A measure of the money supply that includes cash and checking deposits (M1) as well as near money, such as savings deposits, money market securities, and time deposits.

Federal Reserve

The central banking system of the United States, responsible for nation's monetary policy, financial regulation, and stability of the financial system.

Board of Governors

The Board of Governors is the leading body of a central bank in many countries, responsible for overseeing the bank's operations and policies.