CEN Module 10
An example of a government transfer is a(n):
Social Security payment.
Which is an example of consumption expenditure?
Stephanie bought a laptop for her brother.
In the circular flow diagram, firms buy goods and services in factor markets.
False
The accuracy of a country's accounts is a remarkably reliable indicator of its state of economic development.
False
The only factor market is the labor market.
False
The rest of the word participates in the circular flow, but only in the goods and services markets.
False
_______ buy resources in the factor markets.
Firms
Which is true of the circular flow model?
Households buy goods and services in the markets for goods and services.
Goods and services sold to other countries are called exports.
True
Which would be classified as consumption?
a new car purchased by an employee of a company for personal use
Investment spending is spending on:
productive physical capital.
Private savings go into financial markets where individuals, banks, and other institutions:
collect inventories.
The flow from households to markets for goods and services is:
consumer spending.
Total household income after paying taxes and receiving government transfers is known as:
disposable income.
In ______ markets, firms buy resources.
factor
Households demand goods and services in the _____ market.
goods and services
Social Security benefits and unemployment compensation are examples of:
government transfers.
The flow from the markets for goods and services to firms is:
gross domestic product
Households derive income from all EXCEPT:
imports.
Disposable income in a particular period is:
income earned plus government transfer payments less taxes.
Households also receive income from:
indirect ownership of physical capital.
Households receive income in the form of all EXCEPT:
investment spending.
Spending on productive physical capital is known as:
investment spending.
The flow from firms to the market for goods and services is:
investment spending.
Spending on inventories is part of:
investment.
The _____ keep(s) track of the flows of money between different sectors of the economy.
national accounts
A(n) ____ is borrowing in the form of an IOU that pays interest.
stock
Shares in the ownership of companies are called ________, and borrowing by a company in the form of an IOU with interest is called_____.
stocks; bonds.
The circular-flow diagram illustrates:
the key concepts in the national accounts.
Which is NOT included in investment spending in the national income accounts?
the purchase of stocks and bonds by a business
Government _____ are payments by the government to individuals for which no good or service is provided in return.
transfers
