In the simple circular flow model
A) businesses buy labor services from households, but supply other factors of production themselves.
B) households spend their entire income on consumer products.
C) profits are a type of income that is not received by households.
D) households spend the income they receive from labor services but save the income they receive from selling the other factors of production.
B
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A favorable supply shock abroad would
a. increase U.S. imports and decrease aggregate demand. b. decrease U.S. net exports and reduce aggregate supply. c. decrease U.S. net exports and decrease national income. d. increase U.S. net exports and increase aggregate demand.
The real interest rate rises:
a. When society, as a whole, is less willing to give up consumption today for consumption in the future. b. When society, as a whole, is more willing to give up consumption today for consumption in the future. c. When expected inflation rises. It has nothing to do with whether or not a society is more or less willing to give up consumption today for tomorrow. d. When expected inflation falls. It has nothing to do with whether a society is more or less willing to give up consumption today for tomorrow.