In the circular flow model, which of the following items is a real flow?
A. The flow of government expenditures to firms for the goods bought
B. The flow of income from firms to households for the services of the factors of production hired
C. The flow of U.S. borrowing from the rest of the world
D. The flow of labor services from households to firms
D Answer D is a real flow because it is a labor service.
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A bank finds itself short of required reserves and therefore borrows from another commercial bank. The interest rate on this loan is: a. zero
b. the prime rate. c. the discount rate. d. the federal funds rate. e. the required reserve ratio.
Refer to the table below. If the price of labor declines from $3 to $2 per unit, then what is the least costly way of producing Zenias?
Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per unit, capital at $6 per unit, and entrepreneurship at $9 per unit.
A. A
B. B
C. C
D. D