Macro Quiz 2

What are the parts that make up the Factor Market? (Factors of Production)

-Land -Labor -Capital -Entreprenuership

A circular-flow diagram is a model that

1)helps to explain how participants in the economy interact with one another 2)helps to explain how the economy is organized

According to the circular-flow diagram, if Denny is the owner of a landscaping business and he just received $50 for moving Mrs. Pendleton's lawn

Denny acts as a firm who interacted in the markets for good and services with Mrs. Pendleton.

A model that shows how dollars flow through markets among households and firms is called the

circular-flow diagram

An economic outcome is said to be efficient if the economy is

getting all it can get from the scarce resources it has avaiable

An economy's production of two good is efficient if

it is impossible to produce more of one good without producing less of the other.

A circular-flow model and production possibilities frontier are similar in that

both make use of assumptions

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

can produce using all available resources and technology

Efficiency is illustrated by

the production possibilities frontier only

A production possibilities frontier can shift outward if

there is a technological improvement or the economy experiences economic growth

Factors of prodcution are

used to produce goods and services and inputs into the production process