The lower portion of the circular flow model contains factor markets in which households receive:
A. output of all final goods and services produced.
B. savings, spending, and investment.
C. goods and services.
D. wages, rents, interest, and profits.
Answer: D
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Suppose the demand function for the Toyota Camry is given by Qd = 500 - 12PC + 10PH - 5PG + 0.0001M, where PC is the price of the Toyota Camry (in thousands), PH is the price of the Honda Accord (in thousands), PG is the price of gas (per gallon) and M is income. Further, suppose the supply curve for the Toyota Camry is given by Qs = 20PC - 55.
a. What is the demand curve for the Toyota Camry if the price of the Accord is $25,000, gas is $2 per gallon and income is $50,000? b. What is the equilibrium price and quantity in the market for Toyota Camrys? c. Is demand elastic or inelastic at the equilibrium price? d. What is the cross price elasticity of demand between Camrys and Accords at equilibrium? e. What is the income elasticity of demand for Camrys at equilibrium? What will be an ideal response?
An economy could produce above its potential GDP for a short period of time by
A. reducing the size of the labor force. B. increasing the price of final goods and services. C. adding extra shifts of work, such as overtime or night shifts. D. increasing the money supply.