Which of the Following Statements About a Simple Circular Flow

question 183

Multiple Choice

Which of the following statements about a simple circular flow model is false?

• A) Producers are buyers in the factor market and sellers in the product market.
• B) Households are neither buyers nor sellers in the input market.
• C) Producers are buyers in the factor market.
• D) Households are sellers in the product market.

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Definitions:

Price Level

A measure of the average prices of goods and services in an economy, indicating the purchasing power of the currency and the inflation rate.

Unemployment

The situation where individuals who are capable of working and are seeking work are unable to find employment.

Classical Notion

An economic theory advocating for free markets, competition, and minimal government intervention in the economy.

Monetary Neutrality

The proposition that changes in the money supply do not affect real variables.