Exam 2: The Market System and the Circular Flow

In a command economy like the old Soviet Union, one is able to improve one's lot and get ahead in society largely through:

According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms must be falling.

The Heritage Foundation in 2012 ranked which of the following economies to have among the highest economic freedom?

Which is one of the five fundamental questions that need to be dealt with in any economic system?

The highly influential book by Adam Smith, who brought up the "invisible hand" notion, is titled:

Even with the use of money, exchange and trade cannot occur if there is no coincidence of wants.

The choice of the most efficient production technique is not affected by how much buyers want to buy the product.

In analyzing a market system, economists often assume that firms will choose the production techniques that will give them the maximum revenues.

Refer to the above figure. If box A represents households, D the resource market, and C businesses, then flow (8) would represent ___ while flow (7) would represent ___.

The circular flow model illustrates:

Which of the following would not be emphasized in a capitalist economy?

Payments that a firm makes to obtain needed resources comprise its:

Competition in a market system denotes a condition where:

A required element for specialization to lead to an increase in the satisfaction of society's wants is:

The concept of consumer sovereignty refers to the situation where consumers have the right to vote for the board of directors of large corporations.

Which of the following guides sensible decisions regarding the management of business risk in a market system?

The problems of central planning become less complex as an economy grows in size over time.

The term consumer sovereignty means that:

The major "success indicator" for business managers in command economies like the Soviet Union and China in the past was:

In the circular flow model, households act as buyers in the resource markets.