How are the roles of the household different in the goods market and in the factor markets?
What will be an ideal response?
In the goods market, households are buyers. They purchase the goods and services produced by the firms. In exchange for the goods and services, households pay firms. In the factor market, households are sellers. They provide the services from land, labor, capital, and entrepreneurship to the firms. In the factor markets, households receive payments from firms.
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Suppose that in Southlandia, frictional unemployment is 2%, structural unemployment is 3%, and cyclical unemployment is 4%. What is the natural rate of unemployment in Southlandia?
a) 2% b) 3% c) 5% d) 9%
When the United States ran large budget deficits during 2001-2011,
a. private investment was strong and consumer expenditures declined as a percentage of GDP. b. private investment was weak and consumption increased as a share of GDP. c. the trade deficit of the United States shrank, indicating that borrowing from foreigners was declining. d. the deficits were financed exclusively through borrowing from domestic sources.