Households and firms pay taxes to the government to: A)increase their consumption spending.

B)finance the country's import bill.

C)increase their savings.

D)improve their standard of living.

E)finance government expenditures.

Which of the following flows from the government to the households, according to the circular flow diagram? A)Goods and services

B)Resources of production

C)Taxes

D)Government services

E)Loans

The circular flow of income model shows: A)the flow of output and income within one sector of the economy.

B)how different sectors of the economy are linked together.

C)that income is rarely equal to output.

D)how business firms interact with one another.

E)how businesses sell their resource services to households.

Which of the following will invariably be illustrated by a circular flow of income diagram? A)The value of foreign net output

B)Trade deficit always equals payments for resource services

C)The value of output is equal to income

D)The value of private production always equals the value of household income

E)The value of net exports is positive

A trade deficit involves: A)net flows of goods from foreign countries to the home country government.

B)net money flows from the foreign country firms to the home country government.

C)net money flows from the domestic firms to the home country government.

D)net money flows from the foreign country firms to the home country.

E)net flows of goods from foreign countries to the firms of the home country.

Balance in international trade suggests that: A)a trade surplus exists.

B)there is a net flow of goods and services from foreign countries to domestic firms.

C)a trade deficit exists.

D)domestic firms buy more foreign products than they sell.

E)the value of net exports is zero.

In the market for digital photo frames, any change in the price of a digital photo frame would lead to a change in the overall demand for other photo frames. A)True

B)False

The replacement of film-based still cameras by digital cameras and recently by digital SLR cameras exemplifies creative destruction. A)True

B)False

A person obtains income is obtained by selling the services of the resources that he or she owns. A)True

B)False 

In a market system, the distribution of income is determined by the ownership of resources. A)True

B)False