In the circular flow model, firms use the money they earn from selling their goods and services to pay for the
a. goods and services they buy on the product market
b. resources they buy on the product market
c. goods and services they buy on the resource market
d. resources they buy on the resource market
e. differences between the revenue they earn selling the goods and services and the costs involved in producing them
D
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Jack is near retirement and worried that if the stock market falls he will not be able to wait to take his funds out, and will have to sell at the bottom of the market
Richard thinks the probability of a stock market downturn is the same, but he is only 40 and could therefore wait for another turnaround. They face the same budget line. Jack's risk/return indifference curve A) will be concave; Richard's will be convex. B) will be convex; Richard's will be concave. C) will be tangent to the budget line at a point to the left of Richard's. D) will be tangent to the budget line at a point to the right of Richard's. E) must still be tangent to the budget line at the same point as Richard's.
A potential problem arises in principal-agent relationships
a. because the agents and the principals have identical goals b. because the principals may want to minimize his profits, while the agent may want to maximize them c. because the agents may have different goals from the principals d. the goals of principals and agents are irrelevant