Question A : The simple circular flow model shows that workers and capital owner

Question

Question A : The simple circular flow model shows that workers and capital owners offer their services to firms through the :

(A) Product Markets

(B) Resource Market

(C) Employment Agencies

(D) Government Agencies

Questions B: In the circular flow model, households earn their income in the :

(A) Resource Markets

(B) Product Market

(C) Capitalist Market

(D) Money Market

Question C : A increase in demand coupled with a simultaneous and bigger decrease in supply will cause equilibrium :

(A) Price to go uo and quantity to go down.

(B) Price to go up and quantity to go up.

(C) Price to go down and quantity to go down.

(D) Price to go down and quantityto go up.

Explanation / Answer

(A) The correct answer is option (B). The simple circular flow model shows that workers and capital owners offer their services to firms through the Resource Market.

(B) The correct answer is option (A). In the circular flow model, households earn their income in the Resource Markets.

(C) The correct answer is option (A). A increase in demand coupled with a simultaneous and bigger decrease in supply will cause equilibrium price to go uo and quantity to go down.

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