Consider the Circular Flow of Income Model with Households and Firms

question 8

Multiple Choice

Consider the circular flow of income model with households and firms as the two sectors.If business spending (investment) were suddenly decreased due to expectations of a dismal economy in the near future,then because total purchases would suddenly be reduced:

• A)the income created would be reduced,and the value of output and the value of income would decline.
• B)the income created would be reduced,and the value of output and the value of income would no longer be equal.
• C)the income created would be reduced,and the value of output and the value of income would increase.
• D)the income created would be reduced,and the value of output and the value of income would decline until the foreign sector was introduced.
• E)the household sector would try to save more.

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Definitions:

Organizational Factors

Elements within an organization that can influence its behavior and culture, such as leadership, communication patterns, and organizational structure.

Individual Factors

Personal characteristics or attributes of an individual that influence behavior and decision-making within various contexts.

Relativist Perspective

The viewpoint that ethical principles and moral or ethical values vary with and depend upon the social, cultural, or historical context.

Ethical Behavior

Conduct that is consistent with principles of moral and ethical values, such as honesty, fairness, and integrity.