Exam 2: Thinking Like an Economist

When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

In the circular-flow diagram, the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

In the circular-flow diagram, which of the following is not a factor of production?

Positive statements are descriptive, while normative statements are prescriptive.