In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.
A) equals
B) is less than
C) may be greater than or less than
D) is greater than
Answer: A) equals
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A fall in the price of flour, used in making cakes, is likely to:
A) increase the supply of cakes. B) decrease the quantity supplied of cakes. C) increase the quantity supplied of cakes. D) decrease the supply of cakes.
One of the negative impacts of export subsidy is that:
a. the price of the domestic good increases in the world market. b. the domestic supply of the goods increases more than proportionately than increase in demand. c. the domestic cost of production of the exportable increase. d. it results in a general deflation and hence the domestic producers incur losses. e. the domestic consumers are harmed as the subsidies are financed by taxing them.