Which statement below is false regarding the circular flow diagram? It depicts interaction between the three main parties in the economy. It is a common misconception that the circular flow diagram and GDP are related. It is a simple model that gives a big picture view of economic activity. A household is an initial holder of resources in an economy.

Which statement below is false regarding the circular flow diagram? It depicts interaction between the three main parties in the economy. It is a common misconception that the circular flow diagram and GDP are related. It is a simple model that gives a big picture view of economic activity. A household is an initial holder of resources in an economy.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter11: Gross Domestic Product

Section: Chapter Questions

Problem 2SQP

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The simple circular flow model shows that: households are on the buying side of both product and resource markets. businesses are on the selling side of both product and resource markets. households are on the selling side of the resource market and on the buying side of the product market. businesses are on the buying side of the product market and on the selling side of the resource market.
The table below shows economic activity for a tiny country. Using the expenditure approach determine the following. Activity Total Value (dollars) Families buy groceries Electronics company sells HD projectors to households Personal trainer gives a Zumba class Custard stand sells pistachio ice cream Police department buys new cars Mayor leads creation of a new budget for education Elevator-construction company builds a new factory Local businessperson purchases corn from Mexico Sports-gear company sells hockey gloves to Canadian team Bike store sells five used carbon-fiber bikes Local stockbroker executes trades for clients 600,000 100,000 5,000 2,000 500,000 300,000 600,000 400,000 200,000 200,000 2,000,000 Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sigr front of those numbers. a. Consumption $707000. b. Investment = $ [2600000. c. Government purchases = $ B00000 d. Net exports $200000
In the circular-flow diagram, the goods markets are where: (a) The households purchase goods from firms;(b) Firms purchase goods from government;(c) Firms purchase goods from households;(d) The government purchases goods from households.
The following equations describe a small economy. Figures are in millions of dollars; interest rate (i) is in percent per annum. Assume that the price level (P) is fixed. Goods Market C = Co + cYD (Private consumption) YD = Y + TR – T (Disposable income) T = To + tY (Total taxes) I = Io – bi (Private investment) G = Go, TR = TRo (Gov. Expenditure and Transfers, respectively) Y = C + I + G (Goods mkt. equilibrium condition) Money Market L = kY- hi (Demand for real balances) Ms = Mo/P (Real money supply) L = Ms (Money mkt. equilibrium condition) Endogenous Variables: C, YD T, I, Y, L, Ms and i Exogenous Variables: Co = 300, To = 80, Io = 450, Go = 300, TRo = 100, Mo = 350, P =1 Parameters: c = 0.85, t = 0.15, b = 50, k = 0.25 and h = 62.5 Policy…
The economy can be represented by economic models. One of the models we use to understand the economy is a “Circular Flow Diagram”. Sketch a Circular flow model and explain the flow of money and flow of goods and services and factors of production caused by the following activities. Sana spends Rs.500 on a haircut. Mustafa receives Rs.200,000 from his 10 per cent ownership of Salman Chemicals Ltd.
Refer to the figure, which of the following pairs correctly identify W and Y? a. Markets for factors of production and markets for goods and services b. Firms and Households c. Expenditures and Income d. Consumption and Investment
Q.No.1. Use the model of supply and demand to explain how a fall in the price of frozen yogurt would affect the price of ice cream and the quantity of ice cream sold. In your explanation, identify the exogenous and endogenous variables.    Find data on Pakistan GDP and its components, and compute the percentage of GDP for the following components for 2017, 2018, and the most recent year available. Personal consumption expenditures Gross private domestic investment Government purchases Net exports National defense purchases State and local purchases Imports Health Education Do you see any stable relationships in the data? Do you see any trends? See any changes in budget due to COVID-19, in above mention indicators. (Hint: A good place to look for data “Pakistan Economics Survey”, which is written each year. Alternatively, you can go tohttp://www.finance.gov.pk/).
Please help with questions D & E: Consider an economy that produces and consumes shoes and houses. In the table below are data for two different users. 2000 2001 Price of a house $120,000 $145,000 Number of houses produced 1000    1050 Price of a pair of shoe $150    $170 Number of pairs of shoes produced 650,000 525,000 Year 2000 Year 2001 Price of a house $120,000 Price of a pair of shoes $150, $170 Number of houses produced 1,000 Number of pairs of shoes 650,000, 525,000 (a) What is the Consumer Price Index (CPI)? (b) Calculate the CPI for both years. (c) Calculate the rate of inflation for 2001 using the CPI. (d) Calculate the GDP deflator for both years. (e) Calculate the rate of inflation for 2001 using the GDP deflator.
Please help with questions D & E: Consider an economy that produces and consumes shoes and houses. In the table below are data for two different users. 2000 2001 Price of a house $120,000 $145,000 Number of houses produced 1000    1050 Price of a pair of shoe $150    $170 Number of pairs of shoes produced 650,000 525,000 Year 2000 Year 2001 Price of a house $120,000 Price of a pair of shoes $150, $170 Number of houses produced 1,000 Number of pairs of shoes 650,000, 525,000 (a) What is the Consumer Price Index (CPI)? (b) Calculate the CPI for both years. (c) Calculate the rate of inflation for 2001 using the CPI. (d) Calculate the GDP deflator for both years. (e) Calculate the rate of inflation for 2001 using the GDP deflator. Please help with questions D & E only.
Which of the following questions would be studied in the area of microeconomics? Select one: a. What determines the number of hours an individual works? b. Do interest rates affect net exports? c. Will an increase in government spending cause inflation? d. What portion of total spending comes from households in the economy?
The most important practice you can do to learn the material in this chapter is to think through the process of moving from one equilibrium to another. For example, what happens when any of the determinants of the components of GDP change? Explain why each step in the process occurs. Use written explanations, supplemented by graphs if you wish, but be sure you explain why.
Government purchases of goods and services = $100 %3D Government Taxes $100 Wages, profit, interest, Consumer Households spending = $650 %3D rent = $750 %3D Factor Markets for goods and services markets Wages, profit, interest, rent = $750 Gross domestic product %3D Firms Exports = $20 %3D Rest of world Imports $20 %3D