2.4 Integrative Questions
1) If a product becomes more popular and consumers want more produced, which of the following best describes what happens to move more factors of production into that industry?
A) An agency of the Federal government directs the movement of factors.
B) The chief executive officers or presidents of corporations require that factors leave one industry and move to the other industry.
C) Factor owners voluntarily move their factors because they want to satisfy the interests of consumers.
D) Wages, rent, interest, and profit increase in that industry, thereby giving factors the incentive to move to that industry.
E) Consumers increase their demand for the products and, as a result, the taxes the producers must pay decrease enabling the producers to hire more factors of production.
2) What determines the income flows that households receive?
A) an agency of the Federal government
B) what they choose to produce, how much is sold, and the price received when sold
C) their ownership of factors of production, how much they sell in the factor markets, and the prices received when sold
D) financial institutions such as banks
E) what they choose to consume
3) What determines the revenue flows received by businesses?
A) an agency of the Federal government
B) what they choose to produce, how much is sold, and the price received when sold
C) their ownership of factors of production, how much they sell in the factor markets, and the prices received when sold
D) financial institutions such as banks
E) what they pay the factors of production they employ
2.5 Chapter Figures
The figure above shows the circular flow model.
1) In the figure above, which of the following represents a real flow of a factor of production?
A) Labor
B) Wages
C) Goods bought
D) Services sold
E) Firms' expenditures on factors of production
2) In the figure above, which of the following represents a money flow?
A) Goods purchased
B) Interest
C) Capital
D) Services sold
E) Goods supplied
3) In the figure above, which of the following represents a real flow?
A) Expenditures on real estate services
B) Profit
C) Capital
D) Wages
E) Both B and D
4) In the figure above, which of the following transactions take place in the factor markets?
i)Michael, a student, orders a computer from Dell online.
ii)Peter gets a job at a Wal-Mart store.
iii)Apple Computer opens a new store in Georgia.
A) ii and iii
B) Only i
C) Only ii
D) Only iii
E) i and ii
5) Margo orders a MacBook Pro computer from The Apple Store online to use it in her graphic design business. How will this be reflected in the figure above?
A) As a flow of a factor of production
B) As a flow of goods and services bought
C) As expenditures on goods and services
D) As goods and services supplied
E) It won't be shown in the figure because this transaction takes place neither in goods markets nor in factor markets.
The figure above shows governments in the circular flow.
6) In the figure above, households
A) receive transfers directly from governments.
B) buy goods and services from governments in goods markets.
C) receive transfers from governments through factor markets.
D) sell factors of production to governments.
E) pay taxes to governments through factor markets.
7) In the figure above, firms
A) pay taxes directly to governments.
B) sell goods and services to governments in goods markets.
C) receive transfers from governments through factor markets.
D) own factors of production.
E) do all of the above.
8) In the figure above, governments
A) collect taxes.
B) coordinate economic activities of households and firms.
C) hire factors of production.
D) own factors of production.
E) sell goods and services to household.
9) In the figure above, which of the following is true?
i)Governments coordinate economic activities of households and firms.
ii)Governments buy goods and services in goods markets.
iii)Households pay taxes directly to firms.
A) Only ii
B) Only i
C) Only iii
D) i and ii
E) ii and iii
10) Social Security tax is deducted from your paycheck. In the figure above this will be shown as
A) taxes flowing from households to governments.
B) taxes flowing from firms to governments.
C) taxes flowing from households to firms.
D) wages flowing from firms to households.
E) wages flowing from firms to governments.
