23) In the circular flow model which of the following flows in the opposite direction from the flow of factors of production? A) finished goods and services B) wages rent interest and profit C) interests payments of Federal state and local governments D) firm’s profit incentives E) the goods market 24) Terri is enrolled in her first economics course. She is required to give a presentation about the circular flow. Which of the following statements should she include in her presentation? A) Households choose the amount of the factors of production to provide the firms. B) Firms choose the amount of the factors of production to provide households. C) Households receive wages for the amount of entrepreneurship they provide firms. D) Firms pay wages for the amount of entrepreneurship they provide households. E) The flows of goods and services and payments for the goods and services flow in the same direction. 25) Aaron locked himself out of his house and had to pay $40 to Brianna who works for Lucky Locksmith to open his door. Based on this transaction in the economy and using concepts from the circular flow model which of the following is true? A) Brianna earned income from supplying her labor services. B) Aaron earned income from supplying his labor services. C) Brianna purchased goods and services. D) Aaron acted as a firm in this transaction. E) Aaron supplied goods and services. 26) In the circular flow model A) the government is represented as a separate market. B) the government buys goods and services from firms. C) goods and services are sold by households and purchased by firms. D) factor markets are where goods rather than services are bought and sold. E) the government has no direct interaction with either households or firms. 27) In the circular flow model with the government sector transfers A) flow in the same direction as do taxes. B) flow in the opposite direction as do taxes. C) to households flow in the same direction as do expenditures on goods and services. D) to firms flow in the same direction as do rent wages interest and profits. E) flow only through the goods market. 28) In the circular flow model with the government sector taxes A) flow in the opposite direction as do transfers. B) flow in the same direction as do transfers. C) on households flow in the same direction as do the goods and services. D) on firms flow in the same direction as do factors of production. E) flow from the goods market to the factor markets. 29) Which of the following is NOT shown explicitly in the circular flow model? A) the governments’ purchases in the goods market B) the taxes the governments collect from households C) the governments’ interaction with firms D) the legal system E) the transfers the governments make to households 30) Which of the following is a function of the U.S. federal government? A) providing the legal and social framework for economic activity B) distributing private goods and services C) deciding for whom firms should produce goods and services D) deciding how much to produce of private goods and services E) determining what wages firms will pay their workers 31) Which of the following is NOT a function of the federal government? A) collecting property taxes B) making social security and welfare payments C) making transfers to state and local governments D) providing public goods and services E) imposing a personal income tax. 32) Of the following the largest single component of U.S. federal government expenditures is spent on A) interest paid on the national debt. B) Medicare and Medicaid. C) national defense. D) purchases of goods and services for purposes other than national defense. E) transfers to state and local governments.
